The Syrah Resources Ltd (ASX: SYR) share price was shooting higher again on Tuesday before giving back its gains and more.
At one stage, much to the dismay of short sellers, the graphite producer's shares were up as much as 27% to 95 cents.
When the Syrah share price reached that level, it meant it was up almost 80% in the space of two sessions.
At the time of writing, the company's shares are down 6% to 70.5 cents.
What's going on with the Syrah share price?
Investors have been scrambling to buy ASX graphite shares this week after China announced plans to restrict exports of the battery-making ingredient.
As we covered here yesterday, Reuters is reporting that China's commerce ministry revealed that the move was "conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests."
While this may not be great news for electric vehicle manufacturers, it could be a big win for Syrah Resources.
Graphite prices have been so low this year that it hasn't been able to operate its Balama project at full capacity. Instead, the company has shut down its operation and brought it online for month-long campaigns to conserve cash.
For example, last week the company revealed that in the last quarter, a single production campaign took place and produced 18kt at a 73% recovery.
Balama C1 costs came in at US$484 per tonne during the operating period, which was just a fraction lower than its weighted average sales price of US$528 per tonne. In addition, C1 fixed costs were US$4 million per month during the shutdown period.
If China does restrict exports, buyers may be forced to source their graphite from producers like Syrah Resources. This could mean better weighted average sales prices and full steam ahead for its operations. Time will tell if this is the case.