China’s graphite exports to Japan drop 42%, urgent need for procurement diversification

China’s 40% drop in graphite exports to Japan prompts urgent need for diversified procurement as Japan grapples with over-reliance on China for 90% of its graphite imports.

China, the world’s primary producer of graphite, experienced a significant decline in exports of graphite and related products to Japan, plunging by over 40% in December compared to the previous month, according to trade statistics released by Chinese customs authorities.

Graphite is a crucial component for lithium-ion batteries used in electric vehicles (EVs), and China, responsible for approximately 65% of global production, implemented export restrictions in December. Japan, heavily reliant on China for 90% of its graphite imports, now faces an urgent need to diversify its procurement sources.

The Yomiuri Shimbun’s analysis of trade statistics reveals that China’s overall export volume of graphite and related products dropped by 20%. Notably, exports to Japan witnessed a substantial 42% decrease, while exports to the United States experienced a 20% decline.

In terms of monetary value in RMB, there was a 25% decrease overall, with exports to Japan plummeting by 59% and to the United States by 15%. This reduction is believed to be a response to Japanese companies intensifying imports to secure stocks after China announced the introduction of regulations in October. The regulations specifically target graphite and related products meeting certain purity and strength requirements, causing some items to see their exports to Japan and the U.S. nearly drop to zero.

China had previously strengthened export controls on gallium and germanium, essential for advanced semiconductors, in August. Consequently, exports of these materials to Japan have consistently decreased. The Chinese Commerce Ministry maintains that these regulations are not directed at any specific country or region. Still, they are widely perceived as countermeasures against export controls in advanced semiconductor fields imposed by Japan, the U.S., and Europe.

In response to these developments, the Japan-China Economic Association, consisting of major Japanese companies, plans to send a delegation to Beijing on Tuesday. The delegation aims to request a review of the regulations directly from the highest leadership to address the challenges posed by the decline in graphite exports and related products from China to Japan.