China which is currently facing an oversupply of graphite electrodes amid increased production and poor domestic demand seems to be exporting its excess supplies to the overseas market. According to China’s CBC data, the country’s GE exports for May have been recorded at 33,400 tonnes, registering an increase of 13% against Apr’19 and 12% y-o-y basis.
Country-wise, the highest exports were made to Malaysia followed by Turkey, Korea and India. As per the market sources, due to ongoing sanctions on Iran by U.S., the Chinese exporters are directing their exports to Oman or Turkey in middle-east and after altering the bill of lading where the origin of shipment is changed at the port, the same is directed to Iran thus making evasion of U.S. sanctions possible.
In the month of May, U.S. had increased tariffs on a host of Chinese products from 10% to 25% that included graphite electrodes also. However, this had little impact on Chinese GE exports as U.S. accounted for only 2-3% of its total electrodes exports.
The Chinese are majorly exporting ordinary power and high-power electrodes. With the removal of anti-dumping duty by India on Chinese GE imports, India has also become one of the favorite destinations for Chinese exporters.
With June month, the steel mills have entered the off season, environmental protection has become stricter resulting which electrodes demand in the domestic market have become limited and the GE producers are focusing more in the export market. In case of UHP grade GE, although the domestic supply is still tight, new capacities are coming up resulting which its tight supply situation will be relieved in a few months.
In first five months of 2019 (Jan-May), China exported about 1.39 MnT of graphite electrodes against 1.23 MnT in the corresponding period of the previous year.
China’s GE prices weaken
In terms of prices, China’s GE market continues to remain weak. The inventory of small-sized electrodes remains high as demand exceeds supply which is the main reason for its price decline.
The current price for 450mm UHP grade electrodes is heard to be in the range of RMB 21,000 – 23,000/MT (USD 3,055-3,346/MT). In case of higher size UHP grade electrodes, the supply is limited and hence quotations remain relatively firm. The price of 600mm electrodes are in the range of RMB 48,000-60,000/MT (USD 7,000 – 8,700/MT).
As per the market participants, the production pace of China’s GE units are slowing down and many new upcoming projects have temporarily suspended their operations and are currently in wait-n-watch mode. However, in the short term it is expected that GE prices may fluctuate and unlikely to move upwards.
Leave a Reply