Benchmark Mineral Intelligence reported that much of China’s flake graphite production is still offline due to “severe winter conditions.” Last year, production was suspended at many Chinese flake graphite mines in Shandong and Heilongjiang provinces as the country made a bid to clean up and consolidate the industry.

As quoted in the market news:

Although mines and processing plants have now been given permission to begin production again, weak market conditions saw many reduce output prior to the winter season, with the majority of miners yet to bring capacities back online.

As regional governments put further emphasis on the development of value-added industries domestically, demand from these markets will increase and supply availability to the rest of the world will fall.

If this coincides with greater demand from areas such as Japan and the US, where significant battery development projects are underway, there could very quickly be a spike in the market.

With junior projects being slowed by the decline in exploration finance and the few new market entrants, as yet, still incapable of supplying consistent product on a large scale, the market could become increasingly turbulent into 2016.

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