China: UHP graphite electrode prices to soften further in May

• Soft demand, weak cost support to pressure prices
• EAF steel output may decline further this month

Mysteel Global: After falling rapidly during the past two months, Chinese prices of ultra-high-power (UHP) graphite electrodes may continue to slide this month, caused by declining demand and weak cost support.

As of 30 April, the composite price of 350 mm diameter UHP graphite electrodes in East China’s Jiangsu province under Mysteel’s assessment dropped by 6.5% m-o-m to RMB 14,500/tonne (t) ($2,009/t), while that of 600 mm electrodes fell by 5.7% from end-March to RMB 16,500/t, both excluding the 13% VAT.

Last month, domestic electric-arc-furnace (EAF) steel producers aggressively pressed down their purchase prices for graphite electrodes in reaction to the hefty losses they were incurring on steel sales, even though their steel production remained high, Mysteel’s survey showed.

Entering this month, a reduction in mini-mill output will likely become the main drag on demand for graphite electrodes, the report suggests.

By the last week of April, the average capacity utilisation rate among the 90 independent EAF mills under Mysteel’s tracking decreased by 1.2 percentage points w-o-w to 55.5%, bringing an end to the 11-week rise in capacity use that had begun in early February.

As the traditional summer lull for the steel market approaches, EAF mills’ output is expected to decline further this month.

Meanwhile, some UHP graphite electrode producers are planning to restart operations after completing regular maintenance, Mysteel Global has learnt. Their return to business may lead to an increase in electrode supply and place more downward pressure on the prices, sources said.

On the other hand, prices of raw materials for electrode production dropped significantly last month and are expected to continue weakening this month, which will weigh on electrode prices as well.

For example, by the end of April, prices of medium-temperature coal-tar pitch in North China’s Hebei were assessed by Mysteel at RMB 3,650/t, down by a large 17% m-o-m.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.