China to Restrict Graphite Product Exports

China to Restrict Graphite Product Exports

China decided to implement strict controls on graphite product exports Friday, citing national security and protecting national interest as reasons for the move.

Export controls

Graphite exporters will have to get special export permits to sell their products to overseas customers starting December 1, 2023, the country’s Ministry of Commerce and the General Administration of Customs said in a statement.

The curbs apply to high-purity, high-strength, high-density artificial graphite materials, their products, and natural flake graphite and the products produced from it. The move is in a bid to ensure “the security and stability of the global supply chain and industrial chain.”

China, the world’s largest graphite producer, refines more than 90% of the world’s graphite into the materials used to manufacture batteries for electric vehicles (EVs), a Reuters report said Friday.

China dominates the global market

In 2022, China was deemed the global leader in graphite production, accounting for an estimated 65% of the world’s graphite production, a survey by the US Geological Survey showed.

While imposing restrictions on shipments of “highly sensitive” graphite items, the Chinese government lifted previously placed curbs on exports of five less sensitive graphite products used in the steel, metallurgy, and chemicals industries, added the Reuters report.

Japan, the US, India, and South Korea are the top buyers of the country’s graphite materials and products, added the Reuters report, citing the country’s customs data. Hence, they are likely to be impacted most by the export curbs imposed by China.

Global graphite prices are expected to go up following the full implementation of China’s curb of graphite exports toward the end of 2023.

The global EV market will bear the brunt of the supply curbs on graphite products due to China’s export controls and EV manufacturers worldwide will have to contend with higher raw material prices while looking for alternative sellers.

Crucial quote

“With this new graphite export curb, South Korean firms which heavily rely on China for graphite imports would need to seek alternatives, such as mines from the United States or Australia, but it would likely increase the cost burden for many,” Kang Dong-jin, an analyst at Hyundai Motor Securities, told Reuters.

Trade war

Beijing’s strategy to curb the export of natural graphite and graphite-made products comes days after the US imposed heavier restrictions on semiconductor exports from American technology companies like Nvidia to China.

Other countries like Japan and the Netherlands also followed Washington’s move to ban the export of artificial intelligence-based chips and chip-making equipment to China to limit the world’s second-largest economy’s access to advanced technology.

Curbs on the export of graphite items are also aligned with its earlier policy to limit the selling of metals germanium and gallium, which are essential elements used to make several high-tech components advanced chips, electric vehicle batteries, radars, and satellites.

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