MCHI - China to restrict exports of key EV battery material graphite

2023-10-20 04:29:08 ET

China is stepping up its efforts to maintain its manufacturing dominance, with the government releasing new rules to restrict exports of graphite, a key material used in electric-vehicle batteries.

Beijing will require special export permits for three grades of graphite starting December 1, the Ministry of Commerce and the General Administration of Customs said . Temporary controls on five less sensitive graphite items used in industries such as steel, metallurgy, and chemicals were dropped.

The new curbs are "conducive to ensuring the security and stability of the global supply chain, and conducive to better safeguarding national security and interests," the ministry said.

The development pushed the Hong Kong-listed shares of China Graphite Group 12.5% higher .

Th ministry clarified that it was not targeting any particular country. Top buyers of graphite from China include the U.S., South Korea, Japan, and India.

China is the world's top graphite producer and exporter. It also refines over 90% of the word's graphite into the anode material used in EV batteries.

Ivan Lam, an analyst at Counterpoint Research, does not expect a major impact in the near term. However, graphite prices will likely increase "due to supply and demand imbalances, including Russia, which was one of the major graphite suppliers before the Russia-Ukraine war."

Beijing's move comes just days after Washington unveiled new restrictions on AI chip exports to China. While the U.S. is targeting China's access to advanced technologies over national security concerns, Beijing has pushed back by leveraging its dominance over certain materials.

China in July instituted export controls on some gallium and germanium products, choking the international shipments of the chipmaking metals .

More on China-U.S. exports

• Hayman Capital's Bass: Stop investing in Chinese stocks
• Nvidia slumps on new U.S.-China chip curbs, but downplays impact
• Dutch chip gear maker ASML shakes off China export worries
• Nano One: North America's Answer To China

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