Category Archives: Graphite Electrode

China’s Graphite Electrodes prices remain high but stable amid tight supply

China’s graphite electrodes (GE) prices, that have rallied by an average of 34% since Jan’21, continue to remain elevated with 600mm UHP grade currently being assessed at RMB 26,000-27,000/tonne ($4,025- 4,180/t) whereas HP grade 450mm is at RMB 21,000-22,000/t ($3,200- 3,400/t).

During Jan-May’21, China recorded a 14% y-o-y increase in its total crude steel output as the same stood at 473 millon tonnes (mn t). Out of this, the country’s steel output via the electric arc furnace (EAF) route stood at around 47 mn t. In 2020, China was back to raising its steel output to more than 1 billion tonnes to meet domestic as well as overseas demand on the back of a revival in economic and industrial activities.

While demand for GE from country’s EAF- steel-making sector is robust, its supply in the domestic market has turned tight amid rise in demand from the lithium battery sector, used in electric vehicles.

High raw material costs

Another reason for GE prices remaining elevated is the increased prices of a key raw material, needle coke. Needle coke is a specialised form of petroleum coke that is derived during coke production from coal tar or as a by-product of the oil refining process.
The average needle coke price in China is currently assessed at RMB 9,000-10,000/t ($1,400-1,550/t) which was at the levels of RMB 7,000-8,000/t ($1,090-1,240/t) three months back in Mar’21.

Along with its usage in the GE sector, there is soaring demand for the same from the electric vehicles (EV) industry. Electric vehicle sales in China are surging, as demand is growing for emission-friendly automobiles. The China Association of Automobile Manufacturers (CAAM) recently reported record EV sales for the month of June which saw a 139% y-o-y growth in sales at 256,000 units, whereas Jan-Jun’21 sales had moved up by 120% y-o-y basis.

What lies ahead?

July being a seasonally weak month for steel demand, China’s crude steel output is expected to fall, impacting GE requirement in the process. In addition to this, steel plants in Henan, Hebei, Gansu and Anhui have been directed to cut their crude steel output. Thus, GE plants are cautious about production and are holding low inventories. In the short term, Chinese domestic graphite electrode prices would be supported by increased raw material costs and low inventories.

 

India: Graphite electrode prices set for steel manufacturers

SteelMint has reported earlier this month that graphite electrode (GE) prices for 600mm UHP grade have been finalised at INR 345,000-350,000/t ($4,650-4,700/t). However, prices for 450mm HP grade are in the range of INR 275,000-290,000/t ($3,700-3,900/t) for Jul’21. Prices may vary further in the coming months depending upon demand-supply dynamics, informed market participants.

 

India: Graphite electrode prices likely to increase by 20% for July quarter

SteelMint has learnt from reliable sources that Indian graphite electrode (GE) prices for UHP grade (600mm) are set to rise to INR 340,000/t ($4,670/t) from current level of INR 290,000/t ($3,980/t) for Jul-Sep’21 quarter. Similarly, 450mm HP grade electrode prices are expected to touch INR 275,000/t ($3,780/t) against INR 225,000/t ($3,090/t) currently. The price rise is being attributed to rising imported needle coke costs which are likely to go up from the current levels of $1,500-1,800/t to above $2,000/t from Jul’21.

 

Japanese Graphite Electrodes exports drop by 56% in April’21

Japan’s GE (Graphite electrodes) exports have plunged from 5,746 tonnes in Mar’21 to 2,516 tonnes in Apr’21, falling by 56% m-o-m basis as escalated sea freights deterred top buyers to make significant bookings during the month. Japan’s major GE export destinations in April were are UAE (25%), S.Korea (22%), Australia (8%)and Brazil (7%).

 

China’s graphite electrodes prices rally 30% in Jan-May’21 on demand surge

Chinese graphite electrodes (GE) prices for HP grades jumped by RMB 10,000/t ($1,570/t) between Jan- May’21 whereas UHP grades rose by RMB 6,000/t ($940/t) during the period under review.

Prices for the 450mm HP grade are currently assessed at RMB 20,250/t ($3,200/t) whereas the 600mm UHP grade is at RMB 26,000/t ($4,100/t).

Factors like increased domestic steel production via the electric arc furnace route amid rallying iron ore costs and the momentum in economic activities post-pandemic have supported the country’s GE demand and prices.

China allows scrap imports to promote EAF steel production

After over two years of steel scrap imports restrictions, the Chinese government has allowed the same from Jan’21 but the electric arc furnaces will have to adopt the new “recycled iron-steel raw materials” standards.

The decision has been taken:

  • To promote crude steel production via the EAF route amid escalating iron ore prices. The latter is used as the key raw material in blast furnaces. But, Imported Australian iron ore prices in China have rallied by 75% in the past one year. Over Jan-Apr’21, China imported 161,639 t of steel scrap in total, way above the 5,379 t imported during the first four months of last year, as per Customs data.
  • To reduce carbon emissions caused due to steel production via blast furnaces. At the start of 2021, China had pledged to reach a peak in its carbon dioxide emissions before 2030 and achieve net zero carbon emissions by 2030. In line with this policy, the country has started taking several initiatives to control energy consumption under its 14th Five Year Plan for industries classified under “high-energy consumption”.

This proved to be a boon for Chinese GE manufacturers that had been dealing with sluggish demand from the second-half of 2018 due to excess supplies and limited demand.

Rising needle coke prices

Another factor responsible for the rise in GE prices is increased domestic and imported needle coke prices. In the last five months (Jan-May’21), domestic needle coke (both petroleum and coal-based) prices in China have risen by 57% to RMB 11,000/t ($1,730/t) whereas imported ones are up by 18% to $1,300/t. Higher demand from both the electric vehicles battery and GE segments are driving up needle coke prices in China.

What’s happening in Indian market?

In India, prices for 600mm UHP grade electrodes are being assessed at INR 2,80,000-2,95,000/t ($3,860 – 4,065/t) whereas that for the 450mm HP grade is assessed at INR 2,25000/t ($3,100/t).

US sanctions on Chinese GE producer Kaifeng Carbon that used to supply UHP grade electrodes to steel manufacturers in India at competitive rates, has provided an opportunity to Indian GE manufacturers to fill in this space. With China focusing on its domestic demand, imports of Chinese electrodes have become almost negligible.

It is also expected that electrode prices in the Indian market would increase from the July’21 quarter due to an anticipated rise in imported needle coke price.

 

China’s graphite electrode exports fall by 38% in Apr’21

China customs data shows that the country’s graphite electrode (GE) exports have plunged 38% m-o-m in Apr’21 to 32,855 t compared to 52,852 t in Mar’21. Export volumes have decreased for counties like Germany, Russia and Japan. However, exports to Turkey and Malaysia remain buoyant. Market participants have informed SteelMint that China has continued to export GE to Iran via Turkey and Malaysia after the US imposed sanctions on the Islamic Republic.

 

India’s GE exports to Iran could resume with U.S. likely to lift sanctions

According to well placed sources, U.S. is likely to lift sanctions on Iran that were imposed in 2018, and this could be very good news for the Indian Graphite Electrodes producers. Iran has been a key export market for Indian GE manufacturers as country imported about 11,443 tonne of electrodes in 2017 from India, out of the total imports of 87,480 tonne.

 

Indian Graphite electrodes prices surge amid reduced Chinese supplies and increased steel output

The Graphite electrodes (GE) prices in India that witnessed sharp downcycle over CY19 – H1CY20 seems to be reversing now, amid an uplift in steel demand across many regions.
The 450mm HP grade electrodes prices have moved up by 76% y-o-y basis and is trending at INR 225,000/t ($3,020/t) whereas 600mm UHP grade prices have rallied by 25% and is currently at INR 300,000 – 320,000/t ($4,030 – 4,300/t).

Reduced Chinese GE supplies 

The rise in small sized HP grade electrodes prices is much higher as compared to UHP grade electrodes, as the supplies from China (that offered HP grade electrodes at competitive rates) to India have turned quite minimal. The reason being, escalated political tensions between the two countries last year and increased GE requirement in China from its downstream sector.

Showa Denko cuts its capacity

Along with this, the global electrode supplies rationalized as Showa Denko closed down its 40,000 MT capacity in Germany in 2020, giving Indian GE manufacturers opportunity to increase their electrodes exports.

Increased steel production and prices

The higher global steel output and strength in global steel prices has also provided support to Indian GE prices. During January-February 2021, global steel production was at 315 mn t, up 6.6% YoY. Whereas, domestic hot rolled coil (HRC) prices (ex-Mumbai) have moved up by 77% to INR 64,750/tonne from the lows of INR 36,500/tonne in July’20.

This has in fact improved the GE manufacturers margins and has also led to sharp uptick in their capacity utilizations to 65-70% in Q3 FY21 vs 35-40% in Q1 FY21.

What lies ahead?

Amid rising covid cases that has led to lockdowns in various states coupled with oxygen shortage compelling various steel plants to suspend their operations, demand for electrodes is also likely to suffer, adversely impacting its prices.

However, in the long-run, electrodes demand and prices would increase as China has announced cancellation of tax rebate on steel products giving opportunity to Indian steel manufacturers to enhance their presence in the export market.

 

 

Chinese Graphite Electrodes prices rise amid increased demand and high raw material costs

Chinese Graphite electrodes prices that had faced a downtrend last year due to COVID-induced lowered demand are once again gaining traction in 2021. In last four months domestic while UHP grade GE prices have moved up by 25%, HP grade is up by 32%.

The prices for 600mm UHP grade electrodes are assessed at RMB 25,000 – 25,500/t whereas 450mm HP grade is at RMB 19,000-21,000/t. The key factors responsible for the rise in Chinese GE prices are as below:

Increased demand from downstream sector

Till last year, China had imposed stringent steel output cuts was in the “winter heating season” of Nov-Mar, when utilization rates were rolled back by up to 50% in Hebei and other provinces.

However, this year, the environmental policies regarding steelmaking have been more piecemeal and shorter-term, with more autonomy had been given to cities and provinces to implement measures. In many cases, the measures were not strictly enforced and the impact on overall steel production was fairly marginal.

Flat steel prices have been soaring and are expected to continue rising, while downstream demand for rebar is also increasing as warmer weather aids construction activity, leading to increased GE demand from domestic steel market.

Surged raw material costs

The pressure on the production cost of electrode manufacturers still exists, and high raw material (needle coke) costs is one of the main reasons for the continued upward trend of electrodes. The needle coke prices have moved up by 42% in last four months.

The coal-based needle coke price is currently trending at RMB 7,000 – 9,500/t whereas petroleum-based needle coke is at RMB 9,000 – 12,000/t.

The supply for needle coke is still tight because of increased demand from electric vehicles segment in China and the situation is likely to remain so for next few months, informed market participants.

Rise in export demand

China’s customs data shows that country’s GE exports have moved up by 34% between Jan-Mar’21. With major economies back to pre-pandemic consumption levels, demand for steel had improved and so does the electrodes requirements from the EAF-based steel units.

The country majorly exported electrodes to countries like Malaysia, Turkey, South Korea, and Vietnam and while Iran is continuing to face U.S. sanctions, Chinese manufacturers are exporting electrodes via other countries like Malaysia and Turkey.

Outlook

While, China’s domestic steel demand is likely to improve further in the summer season, its export demand would suffer due to high chances of cut in export rebates from 13% to 9%. Thus, the country’s GE demand and prices are likely to get support from domestic steel market while prices are also likely to remain elevated because of the rising needle coke prices.

 

Strong domestic demand and rising raw material cost boost Graphite Electrodes prices in China

Graphite electrode prices in China are gaining strength on the back of rising steel demand, surging needle coke prices and supply tightness of electrodes.

The prices of ultra-high power 600mm UHP grade GE is currently assessed at RMB 23,000/t ($3,510/t) and that of HP grade 450mm is assessed at $18,000/t ($2,750/t). Other specifications of electrodes have also been adjusted to varying degrees and the market situation has improved.

China’s increased steel production

China has allowed imports of scrap since the start of 2021, which has led to increased steel production via EAF route which is currently trending at 72% against the lows of 40% last year due to COVID-19 pandemic. In addition to this, Chinese steel demand has been increasing since late February post-Lunar New Year as domestic construction activities ramped up, supporting electrodes demand and prices.

Supply tightness of electrodes

Another factor contributing to the rise in GE prices is supply tightness of electrodes, according to market sources. As the production cycle for electrodes is long and downstream demand has turned strong especially in past one month, there is increased urge from steel manufacturers to stock up electrodes. There is still a time gap in electrodes availability in sufficient quantity, subsequently supporting GE prices.

Needle coke prices shoot up

Needle coke, a key raw material for electrodes has recorded an increase of 38% in last six months. While coal-tar based needle coke prices are trending at RMB 8,000/t ($1,220/t), petroleum-based needle coke price is trending at RMB 10,000/t (1,530/t). The increased demand for needle coke from electric vehicles as well as both GE segment has pushed up needle coke prices in China.

Outlook

GE prices in China are expected to remain firm in the coming days amid optimistic domestic steel demand outlook supported by steady economic recovery and high levels of infrastructure investment. In the long run, market reports suggest that China’s EAF, steelmaking capacity will increase by 14.3 mn t in 2021 to about 196 mn t, accounting for 15% of China’s total crude steel capacity which would further support GE demand in the country.