China’s graphite electrode (GE) market are heard to be stable this week after the Dragon Boat Festival holidays in the latter half of June.
The prices for 450mm UHP graphite electrode are being heard at RMB 70,000-80,000/MT (USD 10,468 – 11,965/MT), 600mm UHP graphite electrode are at RMB 110,000-135,000/MT (USD 16,450 – 20,190/MT) and that of 700mm UHP graphite electrode are RMB 140,000-160,000/MT (20,940 – 23,930/MT).
According to the market sources, many steel plants in China are currently making purchases according to their needs and the time of the purchases are not well planned as before given the uncertain price movements in the GE market.
While some steel plants have already made purchases of their GE requirement for the month of July, there are only few plants that are planning to make purchase in early July resulting in limited market inquires. At present electric steel plants in China are maintaining stable production resulting which graphite electrode manufactures’ inventory is at a lower level and there are no stocks backlog.
China’s environmental policies are benefitting Japanese GE producers
The Chinese government’s fight against air pollution has pushed up prices for materials (especially graphite electrodes) used in greener steel production. Japan’s GE producer Showa Denko is cashing on the stricter environmental policy. As per the market reports, at a company’s production site in Nagano Prefecture recently, graphite electrodes were lined up for shipment. The company recently boosted production capacity 7% to an annual 45,000 tonnes at the site, but is still having trouble keeping up with orders. Showa Denko expects its operating profit to jump 80% on the year in fiscal 2018.
The fellow graphite electrode supplier Tokai Carbon has already sold out all production planned through 2019 and the company plans to boost production capacity though equipment updates and double or triple product prices in fiscal 2018. Profit from the segment covering the GE material is expected to skyrocket nearly 30 times in 2019 compared to this fiscal year.
Since 2012, output from electric furnaces had fallen in proportion to the global production of crude steel. But the tide has shifted now because of Chinese government push to improve air quality. Beijing implemented a crackdown on producers of low-quality steel below environmental standards, with a deadline of June 2017. The country is urging domestic steel producers to switch to electric furnaces, with the aim of raising the proportion of such output to 20% from less than 10% now.
The electric-car push in China is also causing an upheaval. Needle coke from which graphite electrodes are made is in high demand, not just because of the shift in steel production but also because it is used to make lithium-ion batteries in electric vehicles. Needle coke prices are up three or four times over the past year on competing demand from graphite electrode makers and battery material producers.
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