Japan's Ministry of Economy, Trade and Industry (METI) and the Ministry of Finance (MOF) will initiate an anti-dumping investigation into graphite electrodes from China.

The decision to initiate an investigation follows a review by Japan’s trade and finance ministries of an application received in February 2024 to impose anti-dumping duties from SEC Carbon, Tokai Carbon, and Nippon Carbon. The investigation will focus on Chinese suppliers, excluding regions in Hong Kong and Macao, and is expected to be concluded within one year.

Graphite electrodes are an industrial material used in electric arc furnace (EAF) steelmaking and some ferroalloys. Traditionally, electrodes have been the largest application for graphite, accounting for around one-third of total annual graphite demand. However, over the last few years, they have lost that position to the fast-growing lithium-ion battery sector. Project Blue forecasts graphite demand in electrodes to be only half that of lithium-ion in 2025, with the electric vehicle sector continuing to grow, while the Chinese steel industry has plateaued.

Demand for electrodes is met by the synthetic graphite supply chain, dominated by China where two-thirds of synthetic graphite is produced. Despite the plateauing steel industry in China, synthetic graphite production is getting growing attention in the country with projects estimated to far exceed its market projections. Synthetic graphite, while traditionally higher cost, is the preferred material for Li-ion manufacturers who have opted to use for lower cost natural graphite as a feedstock wherever possible or blend the two. The fast ramp-up of synthetic graphite projects in China above its traditional production for steel indicates a move to compete for market share in batteries against natural graphite.

With electric vehicle growth lagging behind expectations last year and natural graphite and spherical graphite prices falling to maintain market share in the battery supply chain, the rapid ramp-up of competitive synthetic graphite is in surplus. As a result, China’s surplus supply will be able to offer low-cost alternatives to existing supply within the international market, prompting anti-dumping reviews. However, this is a recurring issue in the industry, as China has existing anti-dumping duties imposed on graphite electrodes by the European Commission since April 2022, citing similar concerns.