Availability of these grades is now so tight from China, the world’s majority source of graphite, that consumers can only purchase material in small 200-tonne lots and only on the spot market. A source said: “We can only buy when material comes available and not in advance”.

It is understood that prices have been further constrained as supply of these particular grades is under the control of one Chinese mining group.

Another source explained: "The major Chinese mines are owned by one group, and they are now dominating the prices”.

China’s main graphite deposits are located in the Shandong and Heilongjiang regions.

Already, sources have advised IM to revise prices upwards by some $25/tonne which brings prices t $1,325-1,700 for graphite (crystalline large flake, 94-97% C, +80 mesh CIF UK/main European port); $775-1,200/tonne for graphite (CIF European port, FCL, Crystalline fine, 94-97%C, -100 mesh); and $1,125-1,450/tonne for graphite (CIF European port, FCL, Crystalline medium, 94-97%C, +100-80 mesh).

Sources warn that prices are increasing at such a rapid rate that further revisions are likely in the near term.

Driving consumption is strong demand from the refractories industry in Europe and the market for batteries used in consumer electronics in parts of Asia, namely Japan, South Korea and China. The automotive sector was also cited as a key driver of demand.

The current strong demand levels have not been attributed to a seasonal effect but rather the result of a steady run up in demand over past months.

“Consumption has been steadily rising since the start of the year and stocks are now low,” explained a source.

The current situation marks a turnaround from last year which saw demand for graphite worldwide plummet due to the economic crisis and its impact on graphite consuming industries.