The GE crunch that was started three years back due to supply side structural changes in China seems to have been resolved with China flooding the world market with its cheap electrodes.
According to the customs data with SteelMint, the country has exported about 0.39 MnT of GE in CY19 against 0.32 MnT in the previous year of CY18 (a surge of 22% y-o-y basis). Despite the U.S. sanctions on Iran which is China’s key GE export destination, the latter continued its electrodes supplies to Iran via other countries such as Malaysia and Turkey.
If we analyse China’s country-wise exports in CY19, highest exports were made to Malaysia 65,953 tonnes followed by Turkey at 30,150 tonnes, Russia at 28,757 tonnes and South Korea at 27,942 tonnes. The exports to India stood at 15,512 tonnes. Whereas in 2018, Iran topped the list of China’s electrodes export destination with 45,901 tonnes followed by U.S. at 23,952 tonnes and Russia at 22,909 tonnes and the exports to India were quite negligible due to the presence of anti-dumping duty on the India’s imports of electrodes from China in the first half of 2018.
China’s electrodes supplies plunged significantly in CY19 with new capacities coming up despite the limited demand from country’s domestic EAF sector. Subsequently, Chinese GE manufacturers opted for the exports. The country’s domestic as well as export electrode prices have recorded a significant drop of almost 75% to 80% y-o-y basis.
As per the reputed GE manufacturer in China, graphite electrode prices that have been declining over past one year are expected to stabilize 2020. This year, the production costs of many small companies have touched above the sale price and thus there is quite limited room for prices to fall. He however added that the current supply and demand dynamics of the graphite electrode market is returning to equilibrium but will be affected by policy expectations in the electric steel-making sector.
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