Amid the rising supplies and falling steel demand from downstream sector, the Graphite electrodes (GE) prices in China have once again registered a fall after remaining stable over last three weeks. However, an interesting fact here is that the price plunge is seen only in case of smaller sized electrodes whereas the prices of large size UHP grade GE continues to remain stable.
The current price for 450mm UHP grade electrodes are heard to be in the range of RMB 23,000 – 25,000/MT (USD 3,350-3,600/MT) whereas that of 600mm electrodes are in the range of RMB 48,000-60,000/MT (USD 7,700 – 6,900/MT).
The key reason for the fall in China’s smaller size GE is that the domestic demand for the electrodes in China from the downstream sector is quite tepid and there is no major requirement for the same from the exports market also. The capacity utilization rate of the 53 independent EAF steelmakers in China reversed down after three weeks of successive rises to average 67.25%, lower by 2.49% on the week, according to market reports.
However, on the other hand in case of large sized GE ranging from 600-700mm the overseas demand remains buoyant due to rising orders mainly from middle east countries and the profit margins are encouraging domestic electrodes plants to sell more abroad.
China remains the world’s top maker of electrode products, with exports of graphite electrodes totalling 93,000 tonnes in the first four months of 2019, higher by 20% on the year, according to IC Carbon data.
While the electrodes manufacturers blame the increased competition in the GE market for the price plunge in the domestic market, the end user segment believes that the steady erosion of profit margins for EAF-produced steel is forcing some EAF mills to suspend production for unscheduled overhauls as a result of which result the demand for electrodes is weakening, further softening the prices.
The market experts are of the opinion that due to the continuous decline in the price of graphite electrodes this year, the steel mill procurement season is not as concentrated as last year. At present, the overall capacity of the domestic graphite electrode market is excessive and the inventory of graphite electrode enterprises has increased. Many companies have set their sights on foreign markets and in the short-term prices are expected to fluctuate further.
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