As the week-long Chinese New Year break over 24-30 January approaches, China’s graphite electrode market has embraced the holiday mood and quietened markedly off late. This has encouraged many electrode producers to halt operations and suspend business early to prepare for Chinese New Year (CNY), the country’s most important festival.
“Almost all small independent electric-arc-furnace (EAF) mills except for some large-sized and state-owned steelmakers have already begun their holiday breaks, with the result that demand for electrodes has plunged recently,” a Shanghai-based market analyst remarked.
As of January 9, the capacity utilization rate of the 53 independent EAF steelmakers across China Mysteel canvasses weekly decreased for a third week to hit a 10-month low of just 44.4%, down by another 13.7 percentage points on week, according to Mysteel’s latest weekly survey.
The consequent weak demand for graphite electrodes from mini-mills has left electrode prices languishing a relatively low level. For example, as of January 15 Mysteel’s national benchmark price of 600mm ultra-high-power (UHP) graphite electrodes in East China’s Jiangsu province had slumped to RMB 26,000/tonne (USD 3,714.3/t) including the 13% VAT, hitting a near 32-month low since May 15 2017, according to Mysteel’s database.
“We’ve halted our production since the beginning of this week and we’ll be off for the holiday break from next week,” an official from a mid-sized electrode producer in Sichuan province in Southwest China explained. “With this weakening of electrode prices, we can’t make any profits!” This mill’s electrode production lines are expected to remain closed for at least ten days during the holiday break, he added.
“We’ve observed that this year’s holiday break is likely to be longer than in previous years,” the Shanghai analyst said. “And some electrode producers don’t have much motivation to resume production after the break unless they can see a steady rise in the domestic electrode market,” she added.
This article has been exchanged under the ‘Article Exchange Agreement between SteelMint and Mysteel Global
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