China’s graphite electrode prices that have been talk of industry over the past two years have been under immense pressure since November last year. In the time span of six months the country’s domestic electrode prices have plunged down by 70-75%.
With the start of winter production cuts in China in the latter half of 2018, the GE prices have started falling. The key reason for this plunge that is being understood is the tepid downstream demand coupled with excess electrodes supplies coming up from the capacity additions made by the existing plants or start-up of new GE units.
While the situation continues to remain grave with no upward trend, SteelMint has heard the GE prices in the country have turned stable over past two weeks. The current prices in China of UHP grade GE of size 450mm are heard to be in the range of RMB 26,000 – 28,000/MT (USD 3,800 – 4,100/MT) whereas that of size 600mm are in the range of RMB 48,000 – 53,000/MT (USD 7,000 – 7,700/MT). The price of HP grade electrodes of 400mm are in the range of RMB 22,000 – 24,000/MT (USD 3,200 – 3,520/MT).
The reason for this stability as per the sources is that there is marginal pick up in real estate and infrastructure demand in the country due to which the operating rates of electric furnaces have increased.
The dilemma ahead
With regards to the furutre price trend, there are two contrasting opinions that are coming up amid discussions with the market participants in China. The buyer side believes that this stability in prices is a temporary phase and that there is overcapacity in the current domestic graphite electrode market. The inventory with the graphite electrode enterprise has increased and the procurement volume is low which will further lower down the GE prices in coming weeks.
On the other hand GE manufacturers and traders are of the opinion that given the high raw material (needle coke) costs, the graphite electrode prices have touched bottom, the producers’ profit is meager, and some mainstream producers offer have decided not to lower their prices further which means that any significant fall in domestic GE prices in China is unlikely.
In terms of raw materials, domestic needle coke prices remained stable this week. The domestic needle coke price is heard to be in the range of RMB 20,000-25,000 per tonne (USD 2,950 – 3,660/MT) whereas the imported offers are heard to be in the range of USD 4,000-4,600/MT.
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