Shares in Australian graphite producers have fallen on Friday after the US International Trade Commission (ITC) disallowed major tariffs on products out of China, reversing a previous determination.
Shares in Syrah Resources Ltd (ASX: SYR) and Novonix Ltd (ASX: NVX) fell on the news on Friday, trading 22.9% and 5% lower, respectively.
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Early win stoked hopes
Syrah Resources shares got a boost in early February after the US Department of Commerce confirmed it would place huge tariffs of between 160% and 170% on graphite active anode material (AAM) coming out of China, in a bid to protect the local US industry.
Syrah is part of a lobby group, the North American Graphite Alliance, which had petitioned the US government to investigate whether Chinese graphite active anode material (AAM) producers were being subsidised by the Chinese government.
Syrah said in February that the Department of Commerce (DOC) had determined this was the case.
In its final determination, DOC confirmed that major Chinese battery and graphite AAM producers are "de facto" controlled by the Chinese government and therefore subject to the China-wide dumping rate. The antidumping and countervailing duty (AD/CVD) measures will apply to all natural and synthetic graphite AAM products and AAM contained in blended materials, components (e.g. anode slurries) and subassemblies (e.g. electrodes) imported into the United States from China.
This decision has now been overturned by the ITC.
Syrah stands by earlier statements
Syrah said on Friday it still believed that AAM from China was being sold and imported into the US at "unfairly low and subsidised prices for use in lithium-ion batteries and that this has been detrimental to the establishment and operations of a domestic AAM industry in the US''.
The company added:
There remain existing and potential US import tariffs on Chinese natural graphite and synthetic graphite AAM, including tariffs effective under Section 301 and Section 122 of the Trade Act, and tariffs being considered under Section 232 of the Trade Expansion Act. Further policy implementation under the US Administration's critical minerals and national security agenda continues to encourage ex-China and domestic US sourcing strategies for AAM.
Syrah said the ITC determination could delay sales from its Vidalia facility in the US and limit near-term demand growth for AAM produced in the US.
The company added:
Syrah's Vidalia AAM facility is producing high-quality AAM and has full readiness for commercial ramp-up. The facility is cost competitive with Chinese and Indonesian when producing at commercial AAM volumes. The Company will continue to pursue the ramp-up of production at Vidalia and commercial AAM sales with customers.
Syrah said it was also considering whether there were grounds for appeal.
