The graphite market was dominated by oversupply, trade disputes and China’s continued grip in 2025.
Prices hit multi-year lows as a US investigation into Chinese anode imports highlighted the vulnerability of the electric vehicle (EV) supply chain, with tariffs and anti-dumping duties creating uncertainty for North American producers.
Although natural graphite output has risen from 966,000 metric tons in 2020 to 1.6 million metric tons in 2024, China accounts for nearly all recent supply growth and also dominates refining.
The nation is projected to control roughly 80 percent of battery-grade graphite production through 2035.
Outside the Asian nation, analysts note that US and European producers face high costs and limited alternatives, with trade tensions and tariffs further constraining non-China supply.
While graphite projects in Madagascar and Mozambique offer some diversification of supply, graphite refining capacity remains heavily concentrated, leaving the market exposed to supply shocks.
A US-China trade agreement made late in 2025 eased volatility in the natural anode market, but oversupply and weak demand continue to pressure flake graphite prices as the year closed.
“The agreement between the US and China to roll back planned export restrictions on markets such as graphite is set to provide a stable picture for the next year,” wrote Fastmarkets’ Andrew Saucer in a November update.
“However, for graphite, it leaves many existing trade barriers in place which should solidify shifts in how China and the US are finding alternatives to each other in their natural and synthetic supply chains.’
Graphite prices under pressure
Speaking at the Benchmark Week conference in November 2025, Adam Webb, head of energy raw materials at Benchmark Mineral Intelligence, explained why flake graphite prices — as well as the majority of the battery metals suite — saw weak prices through early 2025, despite a promising demand outlook.
“Essentially, what’s happened here is demand has grown very strongly, but supply growth has actually outpaced demand growth,” Webb said. “Therefore you’ve got the markets in a surplus, and that weighs on prices.”
As graphite prices sank in 2024, a ripple effect impacted supply, hitting the production side hard.
“With flake graphite, you’ll notice it’s actually supply has increased less than demand, and that is because prices were so low that in 2024 you had significant Chinese capacity come offline,’ Webb commented.
‘Also in flake graphite you have competition with synthetic graphite.”
Graphite anodes remain the dominant choice for lithium-ion batteries, but price divergence has sharpened competition between natural and synthetic materials.
Synthetic graphite is expected to retain the largest market share in the near term, thanks to its superior fast-charging performance, durability and electrolyte compatibility. However, natural graphite is gaining attention for its lower cost, higher capacity and lower energy intensity. This competition has divided the market as prices for flake graphite remain low, further pressured by weak demand in the industrial segment.
“Flake pricing on the other hand continues to feel the impact of lower steel demand in 2025 amid declines in Asian and European production in the first seven months of the year,” a September Fastmarkets report notes.
“Expectations among market participants are that production in China will continue to decline through the end of the year and continue to weigh on overall global production.”
Energy storage surge to underpin long-term graphite demand
Despite the market challenges noted by Benchmark’s Webb, the metals consultancy and price reporting agency forecasts 9 percent growth in graphite demand between 2025 and 2035.
This uptick will be strongly supported by a rise in the EV and battery energy storage system (BESS) segments.
“Flake graphite, you’ll see that that price is going up despite the oversupplied market, and that is because to meet that rising demand, there needs to be more supply coming online, and a lot of that supply coming online is high cost. So that’s going to push up the price support, basically, gradually through time,” Webb said.
The BESS market emerged as a major growth driver in 2025, reinforcing long-term demand for battery raw materials, including graphite. As Benchmark outlines, the market for BESS is expected to register roughly 44 percent growth for 2025, almost double the rate of overall lithium-ion battery demand.
As a result, energy storage is set to account for a quarter of total battery demand in 2025.
In North America, momentum has been uneven.
While interest in large-scale storage remains strong, BESS integrators faced mounting pressure in 2025 due to limited domestic battery cell supply, project delays and shrinking margins.
Several leading system providers reported weaker financial results, highlighting the risks of heavy reliance on imported cells and fragmented supply chains.
In Europe, deployed energy storage capacity surpassed 100 gigawatts by November, with batteries accounting for the vast majority of new installations. China, by contrast, saw a renewed surge in energy storage battery shipments. Policy reforms introduced under “Document No. 136” shifted renewable power toward market-based pricing and removed mandatory storage requirements, allowing battery projects to compete on commercial returns.
Together, these regional dynamics underline the growing importance of stationary storage in the global battery market. As BESS capacity expands alongside EVs, demand for graphite anodes is expected to remain structurally strong, even as supply chains and pricing face continued adjustment.
Establishing an ex-China anode supply chain
At Benchmark Week, industry insiders agreed graphite demand will continue to rise through the decade, but the anode supply chain remains constrained by China’s dominance and the high cost of building alternatives elsewhere.
Today, more than 90 percent of battery-grade anode material is sourced from China, a concentration that has become increasingly untenable for western automakers and cell manufacturers.
“Customers are actively looking for diversification,” said Michael O’Kronley, CEO of Novonix (ASX:NVX,OTCPL:NVNXF), noting that supply security has shifted from a long-term aspiration to an immediate priority.
Yet replacing Chinese supply is proving far from straightforward.
A panel featuring graphite executives highlighted that anode qualification can take years, requiring extensive testing to ensure materials perform consistently over a battery’s full lifespan.
“Battery materials aren’t qualified overnight,” O’Kronley said. “It takes years of co-development and patient capital.”
Cost remains the central obstacle. Building an anode plant in North America can cost three to 10 times more than in China, while customers remain reluctant to pay a premium. “A new supply chain has to be paid for somewhere,” O’Kronley warned, arguing that government support is essential if diversification is to scale.
Natural graphite producers face similar pressures.
Financing has become more difficult amid weak prices, even as long-term demand expectations remain strong.
“We expect demand growth closer to 2030,” said Patrice Boulanger, vice president of sales, marketing and business at Québec-focused Nouveau Monde Graphite (NYSE:NMG), adding that government offtake agreements are increasingly critical to unlocking private financing.
Despite growing interest in silicon, lithium metal and other next-generation anodes, the panelists were unanimous that graphite will remain dominant.
“Graphite is clearly here to stay,” said Viren Hira of Syrah Resources (ASX:SYR,OTCPL:SYAAF), with both natural and synthetic materials expected to underpin battery growth through at least the next decade.
Adding context during his own presentation at Benchmark Week, Webb outlined how cost dynamics are reshaping the anode market, particularly the balance between synthetic and natural graphite.
“On the anode side, we’ve seen a move towards synthetic graphite,” he said, noting that the shift has been driven less by performance and more by economics. Producers, he explained, have increasingly turned to lower-quality, lower-cost feedstocks, enabling them to reduce production costs.
As a result, prices for synthetic anode material have fallen, making it more competitive and supporting its growing share of battery anode demand.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.