I bought some graphite rod from these;
**LINK**
Seems to be good quality and machines nicely, I have about 6" of it left, if your in the Sheffield area you can have half of it for free.
Otherwise I used to machine carbon or graphite impregnated PTFE, should be quite easy to get hold of. Seal manufacturers may give you some, or fluorocarbon uk make it, or GAPI uk will stock it. It's not hydroscopic, very easy to get a good finish and has little thermal expansion.
As Circlip says, do not use any nylon it will expand when the moisture hits it, normally about 1-2%.