Cost Transmission: Petroleum Coke Prices Surge Up to 39%

Currently, synthetic graphite accounts for over 90% of China's anode material shipments . In 2025, China's synthetic graphite anode shipments reached 2.67 million tonnes, a 49% year-on-year increase . The upstream raw materials—petroleum coke and needle coke—are both byproducts of oil refining, making their prices highly correlated with crude oil.

After the Lunar New Year holiday, as downstream battery cell manufacturers ramped up operating rates, the raw material coke market has already shown a pattern of “recovering demand, low inventory, and tight supply” . Geopolitical conflicts have amplified this trend: by early March, average prices for low-sulfur petroleum coke had risen 8%, while specific grades like 2#A petroleum coke in Shandong saw increases exceeding 15%, and high-sulfur coke surged by as much as 39% . Oil-based needle coke green coke prices also rose by an average of 5% .

“Petroleum coke and needle coke prices are significantly influenced by upstream oil refining. If they continue to rise, anode manufacturers will face strong pressure to increase prices under cost duress,” industry analysts note. Currently, mainstream mid-range synthetic graphite prices hover around RMB 28,000/tonne, while high-end products exceed RMB 30,000/tonne .

According to GGII analysis, a prolonged blockade of the Strait of Hormuz could drive up prices for most lithium battery materials by approximately 10%, increasing overall battery production costs by 8-12%, which translates to a price hike of RMB 0.03-0.05 per Wh for lithium batteries .

Supply-Demand Dynamics: Clear Price Hike Expectations, But Demand Remains King

Despite mounting cost pressures, long-term pricing for synthetic graphite is more heavily influenced by battery factory utilization rates and end-user demand .

On the demand side, March is seeing a post-holiday production recovery, with rising operating rates at battery plants driving procurement of anode materials . Energy storage orders have been particularly strong, becoming a key pillar of demand growth . Simultaneously, power batteries are undergoing a performance upgrade toward 6C fast-charging capabilities, while the energy storage sector faces an expansion wave of third-generation 588Ah cells. Both trends are boosting demand for high-end synthetic graphite .

On the supply side, although anode producers have resumed full production, the pace of supply growth is struggling to match the speed of demand recovery due to previously depleted inventories and tight upstream raw material supply, maintaining a tight supply-demand balance . Some anode manufacturers have adopted a “production-by-order” strategy to cope with raw material pressures .

Overall, the March 2026 synthetic graphite anode market exhibits a pattern of “strong cost drivers and a tight supply-demand balance,” with significant short-term cost pressures and a clear expectation of price increases .

Technological Divergence: Needle Coke Demand Remains Rigid, Substitution Logic Emerges

Notably, high-end synthetic graphite anodes tend to favor needle coke. Its structure facilitates ordered graphite crystallization, lowering graphitization costs, while its superior electrical conductivity and lithium intercalation capacity significantly reduce anode resistance and enhance performance .

However, needle coke is a scarce resource. In 2022, China imported 127,800 tonnes of oil-based needle coke, a 99.33% year-on-year increase, with 59.1% originating from the UK . As power batteries evolve toward higher energy density, supply bottlenecks for high-end needle coke could become a limiting factor.

Against this backdrop, some companies are exploring alternative pathways. During the coke price surge of 2022, Chinese producers experimented with substituting mid-sulfur petroleum coke for low-sulfur grades to control costs . Analysts suggest that meeting the projected global demand for over 3 million tonnes of synthetic graphite by 2025 will require approximately 4 million tonnes of needle coke—exceeding current production forecasts—further incentivizing the industry to consider different coke feedstocks .

Market Reaction: Anode Sector Defies Weakness

Capital markets have already reacted to these dynamics. On March 13, A-share lithium battery materials sectors showed strength, with anode and electrolyte segments leading gains. CEC Core Sci-tech rose over 10%, while Putailai (Shanshan) hit the daily upper limit . Guojin Securities noted a significant recovery in March lithium battery production schedules, with month-on-month growth of 11-22% and year-on-year growth of 37-56% .

Xinde New Materials, a leading anode coating materials supplier, reported in a research note that its byproduct—carbon black raw material oil—is a downstream petrochemical commodity whose price fluctuates with the oil market. With oil prices rising sharply in 2026, the company expects increased profitability from byproduct sales .

Uncertainty Remains: Tracking Supply-Demand and Geopolitics

Although oil prices have retreated in the short term, the Middle East situation remains uncertain. The hardline stance of Iran's new leadership has many in the industry maintaining a bullish outlook on international oil prices . Coupled with a flurry of large-scale energy storage battery orders since early 2026, the demand-side recovery is also providing anode manufacturers with leverage for price increases .

Medium to long term, the impact of oil price volatility on lithium battery anodes will ultimately depend on the actual interplay of supply and demand. GGII suggests that future price and production trends for anodes require close monitoring of raw material supply, downstream demand recovery, and the evolution of geopolitical conflicts .

For anode manufacturers, navigating the cycle will hinge on balancing cost pressures with end-user demand and securing raw material supply amidst high-end needle coke tightness.