* The price for HP grade GE have been rectified in this article against previous one published on May 7.
After the price rally in the Graphite Electrode (GE) market for almost two years, sentiments turned negative towards the end of 2018 when GE prices started falling in China due mainly to tepid demand from the downstream sector.
GE Supply Glut in China
When prices had surged two years back due to supply side structural changes in the Chinese market, which led to the closure of polluting GE units and subsequent supply shortage, many Chinese GE companies invested either in capacity expansion or building new manufacturing facilities. Over a span of two years, sufficient electrode supply eased concerns in the domestic market impacting both domestic and global GE prices.
Indian Suppliers Facing Competition
With this transformation in the Chinese market dynamics, the Indian GE market scenario also underwent a perceptible change. While during the price rally period Indian GE suppliers had entered into long-term contracts of three months or so with EAF steel manufacturers, at present prices are changing almost on a monthly basis. There is no GE shortage now and the inventory with manufacturers has likewise increased.
According to information that various sources shared with SteelMint HP* grade GEs of size 400mm are in the range of INR 350,000 – 400,000/MT (USD 5,000 – 5,700/MT) whereas UHP grade GEs of size 600-650mm are in the range of INR 650,000 – 700,000/MT (USD 9,000 – 10,000/MT).
“The tables have turned now and Indian EAF steelmakers have a distinct advantage as they are receiving offers from Chinese GE suppliers at competitive rates. In fact Chinese GE quality has also improved over time. Therefore, competition has intensified for Indian suppliers,” said an Indian steel industry insider.
Indian GE Imports Spiral
Chinese GEs have started flooding the Indian market after the removal of the anti-dumping duty in August 2018. In an effort to compete with free-flowing Chinese exports, Indian manufacturers have had to cut down prices. Significantly, India’s GE imports have started spiraling dramatically from Dec’18 when total imports stood at 1,404 tonne against just 403 tonne in Nov’18. In the first two months of 2019, the total volume of Indian GE imports was 2,102 tonne – a sharp rise of 51% on a Y-o-Y basis with about 85% of it coming from China.
Indian Export Market Weakens
This apart, with US economic sanctions adversely affecting demand in Iran – a nation that absorbs a substantial share of total Indian GE exports – there is now GE oversupply in the market. The situation in other EAF steel markets such as Turkey and Egypt –major destinations of Indian GE exports – is also dull owing to poor steel demand amid trade barriers imposed by big buyers such as the US and Europe.
Could High Needle Coke Prices, Falling Margins Wreck Small Players?
Interestingly, a few experts are of the opinion that this downtrend in the GE market may not persist for long as there is a possibility of prices picking up once again with a few GE units in China closing down amid high needle coke costs and falling margins. As the small units are elbowed out of the market, only the big players will survive and exert control over the domestic and export markets, thereby supporting global GE prices.
Will Global GE Prices Bounce Back?
So, will global GE prices bounce back and can Indian exporters hope for better days ahead? To keep track of the subtle changes in the global GE market make sure you attend the 2nd Global Graphite Electrode Conference to be organized by SteelMint Events from 27-29 August, 2019 in Thailand.
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