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Global graphite market has CAGR of 5.2% .........................................
The global graphite market is projected to reach USD 29.05 Billion by 2022, at a Compound Annual Growth Rate (CAGR) of 5.2% from 2017 to 2022. Steel, automotive, and aerospace are the key end-use industries of graphite-based products.
The World Bank forecasts that low-carbon energy technologies, primarily lithium-ion batteries, will require 4.5 million tonnes of graphite per year by 2050, a 500% increase over 2018 levels and a 318% increase over the total graphite produced in 2019. Alongside demand from energy storage applications, the battery industry is expected to become the largest sector of demand for the graphite supply chain.
China is the largest player globally in terms of consumption and production capacity for graphite. Demand for lithium-ion batteries in China is expected to grow rapidly owing to manufacturing growth in the electric vehicle sector and for on-grid and off-grid energy storage applications. The primary driver for graphite demand today has been economic growth within China in addition to emerging economies including India. Prices rose from about US$700/tonne for large flake graphite to almost US$3,000/tonne in 2012, highlighting global dependence on China which accounts for 70-80% of world production.
Graphite prices, which are a function of two factors, flake size and purity measured in % graphitic carbon (% Cg) pulled back following the COVID-19-based economic slowdown but appear set to rise again following the global economic recovery.
New applications such as lithium-ion batteries, fuel cells, and nuclear power have the potential to create significant incremental demand growth for graphite in the future. For example, it takes 20 to 30 times more graphite than lithium to make lithium-ion batteries; and demand is growing rapidly in consumer electronics, power tools, and electric vehicles. Growth will continue to rise with the increased use of hybrid and fully electric vehicles. In fact, each hybrid electric car uses about 22 pounds of graphite, while a fully electric auto uses about 110 pounds.
Market confidence has been boosted this year by continued demand recovery for graphite which has served to increase prices and reduce market uncertainty. The re-establishment of supply chains and a large number of government stimulus packages has also fueled market demand for EVs and higher price expectations.
Demand recovery has been underpinned by growth in the Chinese EV/battery sector but also by higher-than-expected crude steel production and refractory demand since the second half of last year. Many mine developers have started to progress projects downstream, with a particular focus on battery grades to take advantage of rising demand. In the meantime, prices for graphite and other refractory raw materials have risen as a result of Chinese environmental closures and logistical disruptions post-COVID-19, according to Roskill, a materials supply intelligence service consultancy.
The consultancy says that while flake prices showed initial signs of stabilizing in early March, suggesting an easing of some of the supply and logistical disruptions, market tightness may remain due to lags in supply ramp-up. Any battery-grade producers still off-line are now rushing to bring back production to meet the rapid demand increases predicted for 2021.
Demand for graphite has also been growing at over 20% per year due to the proliferation of cell phones, cameras, lap tops, power tools and other hand-held devices. Graphite is the anode material in the battery and there are no substitutes at the present time. More recently, the growth in hybrid and all electric vehicles and grid storage have contributed to continued strong demand growth.
Lithium-ion battery demand already consumes 25% of graphite production from very little a few years ago and this market segment is still in its infancy. It is estimated that new manufacturing capacity will require annual flake graphite production to double over the next three years.
Graphite demand is expected to increase exponentially for natural graphite material as more is used in the production of spherical graphite for the graphite anodes of electric vehicle lithium batteries.
