Oversupply and trade concerns were the most impactful factors in the graphite market in H1.
Prices for graphite fell by 10 to 20 percent in 2024, as noted in an International Energy Agency report, and heading into 2025 the sector was expected to see continued divergence between China and ex-China regions.
Analysts anticipated that domestic Chinese prices would remain low, while US and European benchmarks were expected to climb as supply shifted away from China and created tighter markets.
As the year began, China’s market dominance came into focus as the US launched an investigation into the security of numerous supply chains, including anodes, which are a key end use for graphite.
While those and other factors pressured graphite prices in the first half of the year, analysts aren’t ruling out a moderate recovery in H2 as inventories normalize, though competition from synthetic graphite could limit gains.
Graphite prices hit multi-year lows
Caught in the crosshairs of tariff troubles between US and China, Fastmarkets reported in May that Chinese natural graphite flake prices were at their lowest level since it started reporting on that product in 2018.
In January, the US Department of Commerce officially launched anti-dumping and countervailing duty investigations into imports of active anode material from China. The probes were designed to address concerns that Chinese producers were unfairly undercutting domestic manufacturers through subsidized or dumped pricing.
The move came after petitions filed by the American Active Anode Material Producers in December 2024.
“The new antidumping and countervailing duty investigation on active anode imports from China demonstrates that the anode production is the most challenging part of the battery supply chain for the US to compete with China,” wrote Fastmarkets research analyst Georgi Georgiev in a February report.
“The existing 25 percent tariff has had limited impact on anode imports from China, demonstrating that currently Chinese anode makers remain the cornerstone of global anode supply chains,” he added.
In May, the commerce department issued an affirmative preliminary finding in its countervailing duty probe, identifying subsidy rates as high as 721.03 percent for some producers, while others faced rates of 6.55 percent. A July preliminary determination confirmed dumping, and a provisional 93.5 percent duty was imposed.
If both the commerce department and the US International Trade Commission deliver final affirmative decisions, steep duties could be imposed as soon as this fall and remain in place for at least five years.
Ex-China graphite supply increasingly key
Although graphite mine supply is experiencing growth, rising from 2020’s 966,000 metric tons to 1,600,000 metric tons in 2024, concerns abound about future supply of the key battery metal.
“Rare earth elements appear to be sufficiently supplied in 2035 based on the project pipeline. However, supply concentration for rare earths and graphite remains a key vulnerability,” an International Energy Agency (IEA) report reads. Graphite demand is seen doubling between now and 2040, driven by an uptick in electric vehicle (EV) demand.
To ensure ample supply, the IEA recommends broad growth outside of China up and down the supply chain.
“Diversification is the watchword for energy security, but the critical minerals world has moved in the opposite direction in recent years, particularly in refining and processing. Between 2020 and 2024, growth in refined material production was heavily concentrated among the leading suppliers,” the organization’s report explains.
Refining capacity for critical minerals has become increasingly concentrated, with graphite among the most affected. By 2024, the top three refining nations controlled an average of 86 percent of global output for key energy minerals, up from about 82 percent in 2020. In graphite’s case, China dominates the sector, accounting for nearly all recent supply growth, a trend mirrored by Indonesia in nickel and China again in cobalt and rare earths.
Despite China’s stranglehold on the market, the IEA sees that weakening over the next decade.
“There is some diversification emerging in the mining of lithium, graphite and rare earth elements. The share of mined lithium supply from the top three producers is set to fall below 70 percent by 2035, down from over 75 percent in 2024,” the IEA states. “Graphite and rare earth elements also see some improvement as new mining suppliers emerge over the next decade — Madagascar and Mozambique for graphite and Australia for rare earths.”
While mine supply diversification is a positive first step, growth in refinement and processing capacity is unlikely to see the same ex-China growth trends. The IEA expects refining capacity for critical minerals to remain heavily concentrated well into the next decade, with graphite among the most tightly controlled.
Although some diversification is emerging for lithium and select minerals, China’s dominance shows little sign of waning. By 2035, the country is projected to supply roughly 80 percent of the world’s battery-grade graphite, alongside similar market shares in rare earths, and more than 60 percent of refined lithium and cobalt.
Tariff battle shakes anode supply chain
To counter China’s control, the US is moving aggressively to curb reliance on Chinese graphite anodes, which account for more than 95 percent of global anode output. Since June 2024, tariffs on Chinese synthetic graphite anodes have risen from zero to 160 percent — including the existing 25 percent Section 301 tariff and additional levies.
North American producers have petitioned for duties as high as 920 percent.
Chinese producers initially absorbed much of the cost of early tariffs, but analysts expect they will pass more of the recent increases on to buyers. US automakers and battery makers are bracing for higher costs, with trade data showing that all US graphite anode imports for the EV sector came from China in 2024.
China has responded with its own 84 percent import tariff on US petroleum coke and needle coke.
While China has reduced reliance on US supply, it still sources about 30 percent of each from American producers, meaning higher costs for Chinese synthetic graphite and downstream anode products.
“US EV and battery producers have battled in recent years to keep US imports of graphite anodes from China tariff-free, but their efforts have proved futile over the past nine months and the trade status of graphite anodes has shifted dramatically,” Amy Bennett, Fastmarkets’ principal consultant of metals and mining, wrote in May.
Graphite supply-side fragility
Global demand for battery-grade graphite is projected to surge by 600 percent over the next decade as the energy transition and EV adoption accelerate. However, at today’s depressed prices, developing new supply outside China remains economically unviable — a challenge that’s fueling a looming supply crunch.
The US, which mines no graphite, was entirely dependent on imports to meet domestic demand in 2024, according to the US Geological Survey, leaving it and other non-China markets in a vulnerable position.
History offers a cautionary precedent: in 2010, rare earths prices spiked tenfold after China restricted exports.
Should a similar disruption hit lithium, nickel or graphite, prices could surge five to 10 times, pushing average global battery pack costs up by 20 to 50 percent, the IEA warns.
Such a jump would erode EV affordability, slow adoption and threaten the pace of the clean energy transition.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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