Recent falls in graphite prices have been “exaggerated”
20 September 2012
Sources tell IM prices are down by less than market observers report
The recent softening in graphite prices is not as sharp as has been widely reported, market sources told IM.
“While I agree that graphite prices are lower of late, I do think the magnitude of the change has been exaggerated,” one market participant said.
Prices for 94-97% C flake graphite, both +80 mesh and +100 mesh -80 mesh, were around $150/tonne above IM’s ranges of $1,300-1,800/tonne and $1,100-1,700/tonne (FCL, CIF Europe), respectively, the source said.
They added that prices for 94-97% C flake graphite -100 mesh were $50/tonne higher than IM’s range of $1,150-1,450/tonne (FCL, CIF Europe).
However, prices for some other grades were continuing to track lower, the source said.
Prices for 85-87% C, +100 mesh -80 mesh flake graphite, were down $150/tonne from IM’s range of $1,000-1,300/tonne to $850-1,150/tonne, while 90% C, -100 mesh material was down $50/tonne from IM’s range of $900-1,100/tonne to $850-1,050/tonne, both on FCL, CIF Europe basis, according to the source.
An analyst source, however, said that the prices on IM’s database were close to recent contract graphite prices, but added that short-term prices are significantly higher.
The recent sharp fall in prices may be due to producers agreeing longer-term contracts at discounted prices, the source suggested.
“I see a significant difference between [long-and short-term] prices,” the source added.
Late last week, Brazilian refractory producer Magnesita Refratarios SA announced that it had obtained a licence to build a new graphite plant in Minas Gerais, Brazil, as part of its vertical integration strategy to insulate the company from high graphite prices.
Magnesita’s view on the graphite market was confirmed by analysts.
“The graphite market is expected to remain tight over the next few years, given the strong demand potential and limited capacity additions,” Marcos Assumpcao and Andre Pinheiro, analysts at investment bank Itau BBA, said in a note to clients last week.