Source: IRU created from production vital statistics and trade statistics
SteelMint has heard from its sources that Graphite electrode (GE) prices in Japan for April has risen to 13,00,000 yen per tonne (USD 12,077/MT), twice its prices in the month of January 2018.
The key reason for such a drastic price surge of GE in Japan is its limited availability in the domestic market amid its increased demand from electric arc furnaces for steel production and restricted availability of needle coke- a key raw material for GE production.
The demand for needle coke is rising in Japan against the backdrop of surged GE demand and also due to its increased requirement in lithium-ion-batteries to be used in electric vehicles. With the growing adoption of electric vehicles in Japan coupled with government initiatives to promote sustainable energy utilisation, the demand for the lithium-ion battery is increasing significantly in Japan further impacting its availability for GE production.
Japan’s GE market
Japan is the leading Graphite electrode manufacturer in the world with Japanese firms accounting for about 53% of the world’s total GE production capacity. The major GE producers in Japan are Showa Denko, Tokai Carbon and Nippon Carbon having capacities of 259kt, 96kt, and 30kt respectively.
The country is one of the key exporters of GE after China and EU (European Union). In 2017, the country exported about 98,670 tonnes of Graphite electrodes with highest exports being made to South Korea (25,382 tonnes) followed by U.S. (13,796 tonnes).
POSCO exploring India and Chinese market?
According to the market reports, South Korean steel major POSCO which imports its GE requirement only from Japan is facing difficulties due to the limited availability of Japanese graphite electrodes and therefore the company is looking out for GE in China and Indian market to fulfill its requirement. The graphite electrode prices in India and Chinese spot market is around 30,00,000 yen per tonnes (USD 27,870/MT).
POSCO has a long-term supply contract with GTI (GrafTech International Ltd), Japan. However, GTI is unable to supply any additional quantity of Graphite Electrodes to POSCO that it is entitled to under its long-term contract.
With the growing consciousness towards the environment, steel manufacturers in Japan are opting for EAF (Electric arc furnace) route for steel production. However, amid the limited availability of raw material (needle coke and graphite electrode) required, the profits of steel manufacturers using EAF is likely to be impacted quite adversely.
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