Automakers and battery manufacturers have faced with an eight-fold surge in lithium prices, volatility on the nickel market and political concerns around DR Congo cobalt supply. Many companies have been looking to make downstream deals to secure supply for their ambitious expansion plans. While trading at a fraction of other battery minerals, graphite could make a jump in the near future as well, mounting on the distress of the EV industry.

In contrast to ternary cathode materials, graphite prices have drifted lower this year thanks to weakness in the steel industry, although there have been wide disparities between grades.

China FOB 94-95% purity -100 Mesh sizes are up 31% over the past year, last trading at $765 a tonne, while +100 Mesh prices have been relatively stable over the same period to trade for $890 a tonne. Among the value added products, uncoated spherical graphite (99.95%, 15 micron) has gained 10% in 2022 to average $3,065 a tonne.

Batteries became more than 50% of the cobalt market back in 2016 and the same happened for lithium in 2018. It is expected that next year, lithium-ion batteries will overtake the steel industry as the number one source of demand for graphite.

Graphite demand over the next decade is projected to grow at a compound annual rate of 10.5%, but supply is expected to lag, expanding at only 5.7% per annum, despite a trend of supply diversification, particularly new mining projects coming online in Africa.

By 2025, the battery industry is forecast to consume two thirds of the world’s flake graphite, increasing to 79% in 2030.

The battery can make up 20% to 25% of the total cost of an EV and as the overall cost of batteries has come down, the bill of materials now equals roughly 70% of the cost of a cell.

And while the cathode is the most expensive component responsible for 50% of materials cost in a cell and another roughly 25% for other materials, by weight graphite constitutes 45% or more of the cell.