Chinese Exports of Battery Material Graphite Plunge on Controls

(Bloomberg) -- China’s exports of natural graphite, a material used in electric vehicle batteries, plummeted in December after Beijing imposed controls at the start of the month, tightening its grip on the supply of minerals vital to advanced manufacturing.

Overseas sales plunged 91% month-on-month to 3,973 tons, according to Chinese customs data, after a rush to buy ahead of the deadline saw them surge to more than 45,000 tons in November. Exports had averaged about 17,000 tons a month in the year through October. 

The export restrictions are generally viewed as Beijing’s response to trade barriers raised on Chinese products by Western nations. They apply to materials deemed highly sensitive as so-called dual-use items, a reference to military applications. The curbs were announced just days after the US stepped up efforts to keep advanced semiconductor chips out of China.

Exports of synthetic graphite, which aren’t subject to the curbs, fell 28% to 39,763 tons last month.

The commerce ministry flagged in the middle of December that some graphite export applications had been approved. 

Sales should slow notably from December to the Lunar New Year holidays, which fall in mid-February this year, as government approvals take quite a long time, Shanghai Metals Market said last week, citing its survey of domestic producers. Overseas demand also usually weakens toward the end of the year, and that was particularly the case after purchases ramped up in November, it said.

Chinese shipments of two other critical minerals — germanium and gallium — also continue to be affected by separate controls imposed earlier in the year on national security grounds. Germanium exports jumped more than four times to 3.36 tons in December from the month before, while overseas sales of gallium surged to 7.03 tons from 1.53 tons.   

The minerals are used to make parts for chips, telecommunications equipment and electric vehicles. Some 94 tons of gallium and 44 tons of germanium were exported by China in 2022.

The Week’s Diary

(All times Beijing unless noted.)

Monday, Jan. 22:

• China sets monthly loan prime rates, 09:15

Tuesday, Jan. 23:

• Nothing major scheduled

Wednesday, Jan. 24:

• CCTD’s weekly online briefing on Chinese coal, 15:00

Thursday, Jan. 25:

• Cnooc’s 2024 strategy briefing in HK, 17:50

Friday, Jan. 26:

• China weekly iron ore port stockpiles
• Shanghai exchange weekly commodities inventory, ~15:30

Saturday, Jan. 27

• China’s industrial profits for December, 09:30

On the Wire

China and Democratic Republic of Congo are discussing $7 billion in financing as part of a renegotiated minerals-for-infrastructure deal, President Felix Tshisekedi said Saturday at his second inaugural address in the capital, Kinshasa.

Chinese battery makers, including CATL, and lithium stocks may fall after the US banned the Defense Department from buying batteries produced by China’s biggest manufacturers.

China’s commercial lenders held their benchmark lending rates steady on Monday, in line with the central bank’s decision to maintain policy rates amid concerns over pressures on the yuan.

©2024 Bloomberg L.P.