A Taylor, Jr
GRAPHITE ADVOCATE NEWS
Outlook Reexamined Issue No. 29 November – December 2007
This outlook is based on structured, in-depth conversations with well-placed industry observers, some preliminary statistics, a few corporate press releases and associated trade press items, and the professional judgment of the Editor/Publisher, Harold A. Taylor.
New readers of GAN should also check the cover for "Early-Bird", "Late-Bird", and "Pulsetaking" Outlooks, and the large body of information built up in the back issues, Issues 1 to 27. Issue 29 begins the reorganized series.
General Outlook for 2007: The general U.S. 2007 outlook for natural graphite looks about the same as for 2006, after a similarly neutral 2006 over 2005. Factors underlying the outlook are the longer-term increases in Chinese natural graphite consumption impacting the world, especially in steel, and market-disturbing changes in Chinese government policy. Overall U.S. natural graphite demand in 2007 will be flat with 2006. January-September 2007 U.S. natural graphite imports are about 5% above those of the same period 2006; this would support a fairly neutral outlook.
Before going into the individual outlooks for end-uses, the most likely disturber of these outlooks will be mentioned. Around August 2007, the Chinese Government began advising Chinese banks to refuse to finance graphite exports to cover the time from shipment overseas to payment by customers; such financing is a standard worldwide procedure for exports. This could cause some bankruptcies or declarations of force majeure, disruption of graphite supplies, and general chaos. There is also the brand new Chinese export tax on graphite; the story is still unfolding.
Outlook for graphite-based refractories: Natural graphite (mostly flake) is used in alumina-graphite shapes, carbon-magnesite brick, plus some in crucibles, monolithics (i.e. gunning and ramming mixes), and others. The alumina-graphite shapes are used as continuous casting ware in the form of nozzles and such to guide the molten steel from ladle to mould. U.S. carbon-magnesite brick demand is met by imports from China, a shrunken U.S. production, and monolithics used as a continuous furnace lining. The USGS published a 2006 consumption number of 11,000 tonnes used in graphite-based refractories, down 7% from 2005. U.S. graphite demand in 2007 for use in refractories in this end-use is likely to be up 5% from that of 2006.
Outlook for graphite foil, expanded graphite, and some related items: This is one of the next-biggest markets for natural graphite, and currently is about 7,500 tonnes annually. U.S. graphite demand in 2007 for graphite foil and related items will probably be down 10% from 2006.
Outlook for (natural) graphite in brake linings: Natural graphite (amorphous and fine flake) is used in brake linings for heavier (nonautomotive) vehicles, substituting for the formerly used asbestos, and now competing in turn with newer organic compositions. The USGS 2005 consumption was 6,510 tonnes in this end use (the 2006 number was withheld.) The 2007 U.S. natural graphite demand in this use is likely to be down 5% from 2006.
Outlook for some of the other natural graphite end-uses: This would include natural graphite use in steelmaking, foundry facings, powdered metals, in plastics and rubber, and in lubricants. Again, for these end-uses, natural graphite will have a complex very price-dependent competition with synthetic graphite and other carbons, especially for use in steelmaking as a carbon raiser. The graphite demands of this group of end uses in 2007 are likely to be all flat compared to 2006, except for drops in the automotive-related uses (i.e. powdered metals down 15% is the most extreme). The use in pencils was weak, nearly nonexistent.
There is more background information on natural graphite end-uses and applications in the "Graphite" wiki on Wikipedia, plus information on synthetic graphite applications (i.e., graphite electrodes), and recycling graphite.
The October 2007 Industrial Minerals has the most encyclopedic article on natural graphite to appear in some years. It not only covers China, Brazil, Canada, India, Madagascar, Sri Lanka, Zimbabwe, Norway, and the Ukraine, but also Australia, Mozambique, Sweden, Austria, and the Czech Republic. It discusses use trends for flake and amorphous graphite and private sector activity in China.
Statistical Parameters: The posted Industrial Minerals graphite prices for the 94%-97% crystalline flakes increased again in 2007; for example, the December 2006 price for Crystalline Large 94-97% C +80 mesh was $800-$950 per tonne and by November 2007 became $880-$990, and the December 2006 price for Crystalline Medium 94-97%C +100-80 mesh was $730-810 per tonne, which became $800-900 by November 2007.