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Thursday / November 14.

Past, Present, and Future of Graphite as an Investment

Experts see the future in graphite. Here’s a look at why graphite is one of the most sought-after commodities on the planet, and how it all happened.

The Past

In the 1990s, China produced huge amounts of graphite to earn foreign currency. The oversupply caused a significant decline in prices. The trend continued until 2005, when the demand from the steel industry and commodity supercycle pushed prices up again. The undersupply of lithium pushed the prices of graphite to record levels in 2012. However, this boom did not last due to the decline in demand for steel and a slowdown of the Chinese economy.

The Present

The price of large flake graphite is now up about 40% because of improvements in the steel market and lower output from China, but mainly because of its use in lithium-ion batteries. Although graphite has been slow to respond to the commodity supercycle – lithium and cobalt took the lead – it is still well on its way to a price hike.

Moreover, the United States and European Union have declared graphite a supply critical material. This is because of a slowdown in graphite production in China. 70 to 80% of the world’s supply of graphite comes from China. But even though the country is a major producer of graphite, the recent closure of pollution-causing industrial plants has reduced graphite electrode production by 30%. The country now imports graphite to support its tech industry and the reduction in supply is driving prices up.

The Future

According to BNN Bloomberg, depending on the material used as the cathode, a lithium-ion battery requires up to 15 times more graphite than lithium. The publication also notes that an electric vehicle like the Tesla Roadster uses 110 kilograms of graphite per vehicle. Other major automakers are introducing their own versions of electric vehicles and will need lithium-ion batteries to power them.

Graphene, that’s made from graphite, has the potential to replace existing materials and also open up new markets. The disruptive power of graphene comes from its incredible properties. It is the thinnest, yet strongest material known to man. And it’s the best thermal conductor among all other materials, including copper.

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