Specialized organizations have predicted that the impact of China’s graphite export control will be resolved within three months. This is because there have been similar cases in the past and it is difficult for China to consume all the graphite produced in China alone. However, South Korean battery makers’ factories in the United States may have trouble getting graphite from China, so they need to make thorough preparations, experts say.
In a report on the impacts of China’s graphite export control and countermeasures against it released on Oct. 30, the Korea International Trade Association (KITA) predicted that the most likely scenario is that exports will return to normal after three months following the full implementation of China’s graphite export control in December.
On Oct. 20, China announced measures to adjust its graphite export control list. In addition to artificial graphite, which has been under export control, high-purity natural graphite for secondary battery cathode materials was added to the list to be controlled beginning from December. Companies on the list that are exporting graphite will be required to undergo a review by the Chinese government. “This may temporarily disrupt graphite supply, but based on past experiences, it is expected that exports will be able to resume in about three months,” a KITA spokesperson said.
Although South Korea is highly dependent on graphite from China, China is also a big exporter of graphite to South Korea so it will lose money if graphite exports to South Korea are blocked. As of January-September this year, South Korea’s dependence on Chinese imports of graphite products reached 97.7 percent for natural graphite and 94.3 percent for artificial graphite. Nearly all of the graphite that South Korea needs has been imported from China. “Korea’s share of China’s graphite exports is 10.3 percent, second only to the United States,” a KITA spokesperson said. “China is the world’s largest net exporter of graphite and needs to export graphite to Korea, as domestic demand in China alone can cause a supply glut.”
China already controlled graphite exports once before in September 2006. At the time, the nation used the same method of making graphite exports subject to the Chinese government’s permit. In September and October of that year, China’s graphite exports fell by 24.4 percent and 4.8 percent year on year, respectively, but exports normalized in November 2006.
However, given that China’s graphite export control is a warning to the United States amid the U.S.-China economic conflict, it is difficult to make a simple comparison between the graphite export controls in 2006 before the U.S.-China conflict erupted and this year.
“As China’s export control measures are interpreted as retaliatory measures against the United States, there is a possibility that a permit for Chinese graphite exports to Korean battery companies’ factories in the United States may be delayed or rejected if the U.S.-China relationship again deteriorates in the future,” said Do Won-bin, a researcher at KITA. “In the medium to long term, it is necessary for Korea to diversify graphite import sources to Mozambique, Brazil, Japan and others and develop silicon cathode technology to replace graphite in the battery industry to lower supply chain risks.”