This news has also drawn attention from South Korean media. According to a report by Yonhap News Agency on the 4th, the U.S. government has decided to continue providing two-year electric vehicle subsidies even for electric vehicles that use graphite sourced from China. In fact, since December 1, 2023, when the U.S. Department of Energy issued guidance clarifying the definition of “Foreign Entity of Concern (FEOC),” it has been stipulated that, starting in 2024, electric vehicles eligible for tax credits must not include any battery components manufactured or assembled by FEOCs. Furthermore, beginning in 2025, electric vehicles eligible for tax credits must also exclude any critical minerals extracted, processed, or recycled by FEOCs. Since then, South Korean industry players have been concerned that, given the current global reliance of the electric vehicle and battery industries on Chinese graphite, it will be extremely difficult for them to continue receiving related subsidies. Yonhap News Agency noted that graphite is an indispensable core mineral in batteries, yet China currently dominates the market for this material. As a result, South Korea’s efforts to find alternative supply chains to replace those from China are expected to take several years.

The recent easing of U.S. export controls on graphite materials used in Chinese batteries also demonstrates that, after more than a decade of development, China’s lithium-ion battery industry has established profound technological barriers and strong competitive moats across a series of fundamental links—from raw materials and smelting to processing and final product manufacturing. In the graphite industry, whether it comes to processing or production, China’s graphite sector has already taken an absolute dominant position.

According to relevant data, in 2023, China’s natural graphite production reached approximately 1.2 million tons, accounting for 77% of the global total. On the processing end, China boasts a highly developed graphite processing industry chain, with over 90% of the world’s spherical graphite processing capacity and 85% of the global negative electrode material capacity located in China. The development of the international lithium-ion battery industry chain is naturally inseparable from the support of China’s supply chain.

However, it’s also worth noting that shifts in two major domestic and international factors will help the graphite and negative-electrode-material industries—still mired in an industry downturn—to recover and develop.

First, as the U.S. eases its export controls on Chinese graphite and domestic policies shift to allow exports of graphite materials to South Korea, this will boost demand for domestic graphite—and even negative-electrode material—companies.

Second, 2024 will be a pivotal year for China's lithium-ion battery industry, and the bottom-up restoration of the industrial chain will be reflected in both unit prices and shipment volumes.

From a data perspective, domestic prices for high-end synthetic graphite have begun to rebound, rising from 57,000 yuan/ton to 60,000 yuan/ton. According to data released by China Customs, in March 2024, domestic exports of synthetic graphite totaled 54,278.06 tons, an increase of 26.1% month-on-month. In terms of unit price trends, the export price of synthetic graphite rose from 75.8679 million yuan/ton in January 2024 to 137.9719 million yuan/ton in March.

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