US graphite imports triple since August 2021 as EV demand set to jump

Natural graphite imports to the U.S. tripled between August 2021 and April 2022, driven by strong demand for electric vehicles in the wake of the COVID-19 pandemic, according to an S&P Global Market Intelligence analysis of U.S. graphite import data from Panjiva.

The U.S. imported 37,611 tonnes of the battery component over the nine-month period. From August 2021 through April 2022, the most recent data available, monthly imports of graphite to the U.S. increased 214% on average from a year earlier. In March, imports quadrupled year over year as EV sales increased and automakers needed more graphite for batteries.

The total value of graphite imports also rose, though prices were generally lower in late 2021 and early 2022 than they were in 2020. In 2022, monthly import values averaged approximately $11.2 million through April, increasing by 197% and 92%, respectively, compared to 2020 and 2021 average monthly import values.

"Macroeconomic factors have driven demand for autos, particularly electric vehicles. ... New graphite supply needs to be brought online quickly to meet the necessary demand," John DeMaio, CEO of graphite producer Graphex Technology LLC, told S&P Global Commodity Insights.

Global plug-in EV sales are forecast to grow to almost 22 million units by 2026, up 127% from the 9.7 million units expected this year, according to a Market Intelligence forecast published in June. Despite rising demand, DeMaio does not expect a near-term increase in natural graphite prices.

"[Graphite] is not displaying the price volatility associated with commodity production shortfalls," DeMaio said in an email. "There can be a seasonal component contributing to monthly price fluctuations, namely that winter in Heilongjiang Province can decrease output creating a minor supply-demand response. With the planned gear-up of production by major miner China Minmetals Corp., we expect that seasonal spike to smooth out over time."

Heilongjiang province in China is the location of the Qitaihe graphite project, owned by Baotailong New Materials Co. Ltd.

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China is the the global center of graphite processing, and imports of natural graphite from the country to the U.S. have rebounded somewhat since August 2021. Between August 2021 and April 2022, the volume of total natural graphite imports to the U.S. from China averaged approximately 62%, up 9% from the 2019 average and 26% from the 2020 average, according to Market Intelligence data.

"It would have been difficult exporting graphite during that period where there were shutdowns in China," Adam Panyani, managing director at Rho Motion, told Commodity Insights. "It is not really a surprise that [there are] increasing graphite imports [since August 2021], because while you have some projects coming online in the U.S., really the market is still relying quite heavily on imports from China."

U.S. automakers are working to reduce a wide reliance on China for graphite, and they have the full support of the Biden administration.

"It is kind of the desire of the automotive and battery industry to not be dependent on Chinese products," DeMaio said in an interview. "[And so] we have the ability and the agility to adapt to wherever the graphite needs to come from."

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Panjiva is the supply chain research unit of S&P Global Market Intelligence, a division of S&P Global Inc.