Jar containing letter that is covered in pencil (8)
I believe the answer is:
graphite
'that is covered in pencil' is the definition.
(pencils contain graphite)
'jar containing letter' is the wordplay.
'jar' becomes 'grate' (make unpleasant sound).
'containing' indicates putting letters inside.
'letter' becomes 'phi' (phi is a kind of letter).
'grate' placed around 'phi' is 'GRAPHITE'.
(Other definitions for graphite that I've seen before include "Mixed with clay it forms the 'lead' in pencils" , "black stuff" , "Pig hater (anag)" , "Form of carbon used in pencils" , "Writing material" .)