Flake graphite market trends and pricing patterns Andrew Miller Analyst, Industrial Minerals Data

Transcription

1 Flake graphite market trends and pricing patterns Andrew Miller Analyst, Industrial Minerals Data

2 1. Introduction price summary 3. Supply trends 4. Demand trends price outlook 6. Conclusions Outline

3 Pricing In depth market analysis Supply/demand trends Reports Consultancy

4 price summary Prices at 4 year lows Little movement in prices in 2014 Supply fears have provided some positive price momentum Excess capacities preventing sustained recovery Questions for 2015: Will Chinese consolidation continue? How/when will demand rebound? How will new capacities affect the market? 4

5 3. Supply trends China: consolidation nation 5

6 3. Supply trends Heilongjiang (#1) Percentage of Chinese production: 59% Percentage of global production: 35% Capacity: 280,000 tpa Shandong (#2) Percentage of Chinese production: 18% Percentage of global production: 11% Capacity: 75,000 tpa Capacity reductions Minimum Maximum Shandong 10,000 tpa 30,000 tpa Heilongjiang 30,000 tpa 60,000 tpa 6

7 3. Supply trends Large capacities remain 10 producers with capacity > 50,000 tonnes No major projects have come offline 15 of 74 operations closed in Pingdu Restrictions have been limited Minor fines Consolidation to be gradual process Abundance of supply remains Illegal and inefficient mining continues It will take time to regulate the industry 7

8 3. Supply trends The New Generation Location: Australia Location: Sweden 2014 output: 50 tonnes Estimated 2015 output: 5,000 tonnes Target capacity: 11,000 tpa Location: Madagascar 2014 output: 1,000 tonnes Estimated 2015 output: 6,000 tonnes Target capacity: 12,000 tpa 8

9 3. Supply trends Supply outlook: medium term Global flake graphite production down for third consecutive year Flake graphite production 2014: 4% Production to increase in H China output to rebound New projects accelerating production Excess capacities could force cutbacks in H Chinese capacities set to fall consolidation to continue 9

10 3. Supply trends Supply outlook: long term The inevitable: China cutbacks Likely 3 5 years before full extent known Capacities outside of China to grow Next 2 years critical for junior projects The variables: Government intervention The direction of investment These factors will hinge upon demand growth 10

11 4. Demand trends Awaiting an evolution Slow emerging market growth Industrial market stagnation Consumption stable at low levels New/ niche Batteries Driving the recovery: Battery demand growth Value added market developments Structural reform (China) Industrial Economic growth Growth in emerging economies 11

12 4. Demand trends 12

13 4. Demand trends Refractories: solid foundations Output of carbon containing products relatively stable Few signs of graphite utilisation rates falling Supply security becoming increasingly important Greater vertical integration? Offtake agreements? Growth limited Emerging economy demand Growth in steel production 13

14 4. Demand trends Industrial outlook Global economic growth projections positive IMF forecasting 4% growth vs. 3.4% in 2014 Steel demand set to grow by 2% Substantial increases in M. East and S. America Global economy remains fragile Chinese growth continues to slow Slow recovery in developed economies set to continue 14

15 4. Demand trends The Battery Boom Key to battery demand: Electric vehicles Stationary storage Prohibiting growth: Economic growth Technology Government Reasons for optimism: Major efforts to increase capacities San Francisco 100% renewable; 0% waste by 2030 China new energy policies; battery super plants Cooperative approach to energy storage growth 15

16 4. Demand trends Tesla: the game changer? Gigafactory to reform Li ion battery market Overcoming the EV obstacles Range anxiety Performance Price? Cooperation to drive growth across the market Natural vs. synthetic: the crucial question Raw material partners search to begin in 2015 Potential to increase battery demand by 152% 16

17 4. Demand trends China s domestic demand Downstream capacities growing Boom in spherical graphite production New energy initiatives Graphite industrial parks Jixi: China s graphite city Exports under threat as market moves towards recovery 17

18 5. Price outlook The market has bottomed Slow recovery expected over next two years Global capacities to fall in 2015 Chinese consolidation Demand from emerging markets Batteries Value added grades Strong fundamentals Stable consumption levels in traditional markets Industrial growth in new areas Growing need for supply chain security Evolving shape of global market to create opportunities 18

19 5. Price outlook Conservative Bullish 2015 price outlook Supply Production stable Capacities down 15,000 tonnes Crackdown on Chinese production escalates Supply Demand Stable recovery in 2015 demand growth of 5% Above forecast growth in demand from the battery sector Demand

20 5. Price outlook Short term: Price increases approaching February s Spring Festival Adjustment back to current levels by April Medium term: Minor recovery throughout Q2/Q with tightening supply Price growth limited by ongoing low offers from smaller producers in China Long term: Sharper increases expected in 2016/2017 Effects of battery market developments to become clearer Chinese consolidation to escalate New generation of producers to emerge 20

21 6. Conclusions Another difficult year ahead for graphite producers Prices have bottomed, but recovery will be slow Chinese consolidation will accelerate Gradual upturn in industrial markets alongside further battery developments Some positive momentum expected by latter stages of 2015/early 2016 Supply adjustments to boost prices by around 10% over the year 21

22 News & market intelligence Andrew Miller Analyst, IM Data Pricing and analysis Albert Li Analyst, IM Data Pricing trends for critical minerals and metals Ben Ash Advertising Sales, IM Quarterly market outlooks Laura Syrett Prices Editor, IM