How is graphite priced?

Like uranium, there is a posted price for graphite which provides a guideline with respect to longer term trends but transactions are largely based on direct negotiations between the buyer and seller. Graphite prices are also a function of flake size and purity with large flake (+80 mesh), 94% carbon varieties commanding premium pricing. Prices exceeded US$1,300/t in the late 80s but crashed to US$600-750t in the 90s as Chinese producers dumped product on the market. During this period there was essentially no exploration and no new mine has been built in the west for over 20 years.

Graphite prices did not start to recover until 2005 and well surpassed US$1,300/t with premium product selling at up to $3,000/t as the supply of large flake, high carbon graphite was tight in early 2012. Price appreciation was largely a function of the commodity super cycle and the industrialization of emerging economies as new, high growth applications such as Li ion batteries are only beginning to have an impact on demand and consumption. Graphite prices have since declined to the $1,300/t area for large flake graphite due to the slowdown in China and the lack of growth in Japan/Europe/US. As a result, Chinese flake production declined an estimated 25-30% in 2013 due to low prices indicating they are near the marginal cost of production which should limit further price declines.

Price range for +80 mesh, 94-97%C graphite (US$/t)

Price-chart-Feb-13,-2014