The graphite electrode spot market soared, and after declaration of force majeure by CGI, the spot electrode offers have surged above USD 40,000/MT, way above the contractual prices typically paid for 2017 accords — sources have estimated these were roughly around USD 4,000-7,000/MT, depending on supplier and client.
For steelmaking via the Electric Arc Furnace route there is no substitute for graphite electrodes, and manufacturers who have high dependence on electrodes made in China have suggested the possibility that steelmaking will cease. This is the same in the neighboring Korea, due to insufficient electrodes. Even if it is possible to manage this year, there is a strong possibility that the tightness of graphite electrodes continues and the price surge will continue as in the next year.
As production of graphite electrodes were not considered major profitable products, no capital investment has been made in the domestic electrode industry in Japan, and import dependency has been ongoing for a long time. This time, due to the increase in demand for electrodes with increase in electric furnaces in China, the shortage in the Asian electrode market has appeared at once. Chinese electrode — and needle coke production and exports have fallen precipitously this year amid supply-side reforms aimed at culling polluting capacity.
Graphite electrode suppliers are pushing for quarterly contracts from annual, and some electrode producers have already renegotiated prices, given the steepening costs.
Electrode crunch to severely impact EAF’s and steelmakers will have to likely reduce output.
Graphite electrodes export from China increase significantly in CY17 – China exported 88,859 MT graphite electrode in H1 CY17 compared to 60,257 MT in same time period last year. Thus exports have increased by 47% on yearly premises. Major countries that imported graphite electrodes from China are Russia, Iran and India.
In CY16, graphite electrode exports from China stood at 127,620 MT.
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