According to the latest updates, the UHP grade electrodes prices in China have registered a drop of RMB 1,000-1,200/MT (USD 140-168/MT) this week.
The market sources have informed SteelMint that while domestic downstream mills have resumed production in China, the demand for large-sized UHP grade electrodes has not picked up to the extent to support its prices amid huge inventory pile-up.
Before the pandemic happened, the Chinese GE producers enjoyed higher margins on large-sized UHP grade electrodes which prompted them to produce more resulting in its huge inventory build-up.
However, the situation changed when the market opened in April post easing of lockdown restrictions. While the domestic steel production did not pick up to the extent to consume excess stock, electrodes demand from export markets (key consumer of UHP grade electrodes) dropped considerably amid sluggish industrial activities across the globe.
The current offers for UHP grade 600mm electrodes are reported to be around RMB 20,500 – 23,500/MT (USD 2,868 – 3,290/MT) whereas that of HP grade 450mm is around RMB 12,500 – 13,000/MT (USD 1,750 – 1,820/MT).
In the case of GE’s raw material, needle coke, also prices continued to fall amid limited purchases from electrodes manufacturers. The current offers for oil and coal-based needle coke in China are reported to be in the range of RMB 6,500 – 7,000/MT (USD 910 -980/MT).
Outlook
In the short run, a major recovery in UHP grade electrodes prices is unlikely due to fierce competition in the domestic market and the gradual pickup in the industrial activities globally. Amid this, the demand for needle coke is also anticipated to remain muted, hardly giving any support to its prices.
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