Synthetic Graphite: The Unsung Player in the Energy Transition Battle

The graphite industry is heating up, and synthetic graphite is quietly positioning itself as a key player in this transformation. While China controls the natural graphite market, synthetic graphite is emerging as a critical material for industries that demand precision, purity, and predictability—from lithium-ion batteries powering electric vehicles to high-temperature industrial processes.

Understanding Synthetic Graphite and Its Industrial Edge

Synthetic graphite is an engineered carbon material created from hydrocarbon precursors like petroleum coke and coal tar pitch. Unlike its natural counterpart, it’s manufactured under controlled conditions to achieve consistent quality, making it ideal for applications where performance consistency is non-negotiable.

The material comes in distinct forms, each serving different market segments:

Electrodes dominate steel production, where synthetic graphite electrodes are used in electric-arc furnaces for melting steel and iron. Graphite blocks (isotropic graphite) cater to energy storage and solar applications. Secondary synthetic graphite, a by-product powder, competes with natural graphite in lower-end applications like brake linings. Meanwhile, primary synthetic graphite powder commands premium pricing for cutting-edge lithium-ion battery manufacturing.

Why Battery Makers Are Divided on Synthetic vs. Natural

Here’s where it gets interesting. Synthetic graphite boasts superior purity and predictable behavior compared to natural graphite—crucial advantages for high-performance EV batteries. The material undergoes extreme heat treatment (combining coal tar pitch with petroleum coke and oil) to create the uniform carbon structures that modern batteries demand.

The catch? Production is energy-intensive. Research shows synthetic graphite anode production can be over four times more carbon intensive than natural graphite production, translating into significantly higher costs. This economic reality is reshaping buyer preferences: many battery manufacturers are now substituting cheaper natural graphite where performance tolerances allow.

Data from S&P Global reveals that processing synthetic graphite requires three times more energy than processing natural graphite. Combined with ongoing purity improvements in natural graphite (which is now entering markets traditionally dominated by synthetic), the competitive landscape is shifting fast.

Market Size and Growth Trajectory

The numbers tell a compelling story. The global synthetic graphite market hit US$3.41 billion in 2025 and is projected to reach US$4.74 billion by 2030—a 6.83% CAGR according to Mordor Intelligence. Growth is being driven almost entirely by the battery sector’s explosive expansion.

But here’s the supply reality check: according to Benchmark Mineral Intelligence analyst Tony Alderson, “announced supply simply isn’t enough to meet forecasted demand through 2034. Both synthetic and natural graphite will face supply deficits exceeding 600,000 tpa, widening further through 2040.”

Despite this optimistic market size projection, synthetic graphite faces headwinds. China will likely maintain supply surpluses due to existing capacity, while the rest of the world scrambles to build production. Prices for both synthetic and natural graphite are climbing as EV manufacturers compete for limited supply outside China.

Key Players Dominating the Space

The synthetic graphite sector remains “partially consolidated,” dominated by five major manufacturers:

• GrafTech International (NYSE: EAF) leads in high-quality graphite electrodes for steel production
• BTR New Material Group (BJSE: 835185) manufactures cathode and anode materials for lithium-ion batteries in China
• Resonac Holdings (TSE: 4004) operates six global graphite facilities, including one in South Carolina, producing synthetic electrodes
• Ningbo Shanshan Technology (SHA: 600884) manufactures battery components with significant anode production capacity
• Imerys (EPA: NK), the French multinational, supplies synthetic graphite and minerals across multiple industries

The Investment Angle

For investors eyeing the synthetic graphite space, the thesis is nuanced. Market growth is real, but competition from improving natural graphite and production cost challenges make this a story about margins and innovation, not just volume. The winners will be those who can optimize production efficiency while natural graphite improvements continue reshaping which applications demand synthetic alternatives.

The graphite market’s future is undeniably bright—but synthetic graphite’s path forward demands careful attention to cost dynamics and evolving end-user preferences.