China imposes export permits on graphite amid global supply chain concerns

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China imposes export permits on graphite amid global supply chain concerns

China imposes export permits on graphite amid global supply chain concerns

Industry News
Oct 23,23

This move is part of China's strategy to regulate the supply of critical minerals, particularly in the face of challenges to its manufacturing dominance.

China imposes export permits on graphite amid global supply chain concerns

China's commerce ministry announced that it will mandate export permits for certain graphite products, citing national security concerns. This move is part of China's strategy to regulate the supply of critical minerals, particularly in the face of challenges to its manufacturing dominance. China holds the position of being the world's leading graphite producer and exporter. Moreover, it refines over 90% of the world's graphite, a crucial component used in virtually all electric vehicle (EV) battery anodes.

This requirement for export permits coincides with increased pressure from foreign governments on Chinese companies due to concerns over their industrial practices. For instance, the European Union is considering imposing tariffs on Chinese-made EVs, alleging unfair subsidies. Additionally, the US government recently expanded restrictions on Chinese companies' access to semiconductors, including advanced artificial intelligence chips produced by Nvidia.

The Chinese ministry stated that these measures are essential for ensuring the security and stability of the global supply and industrial chains and protecting national security and interests. It clarified that the regulations are not aimed at any specific country. Major importers of graphite from China include Japan, the United States, India, and South Korea, as per Chinese customs data.

Starting from December 1, China will require exporters to apply for permits to ship two types of graphite: high-purity, high-hardness, and high-intensity synthetic graphite material, as well as natural flake graphite and its products. The ministry had previously placed temporary controls on three highly sensitive graphite items, which are now included in the new list. Simultaneously, temporary controls have been lifted on five less sensitive graphite items used in basic industries like steel, metallurgy, and chemicals.

These new measures are designed to secure the domestic supply of graphite for military applications, such as the aerospace sector, and domestic battery production. The rise in electric vehicle sales has led automakers to seek supplies outside of China, but shortages are anticipated due to these restrictions.

While the impact of these measures on graphite prices in the short term remains uncertain, analysts anticipate a future increase in graphite prices due to supply and demand imbalances. China has decreased natural graphite mining to protect the environment, focusing instead on ramping up synthetic graphite output since 2021. Synthetic graphite now constitutes 70% of China's graphite output, according to Mysteel.

Source: Indiatimes