The weak price scenario in China’s graphite electrodes market that has been continuing over the past few months now seems to be taking a toll on the country’s domestic manufacturers.
According to the market sources, amid the sluggish downstream demand and falling prices, the GE producers are shutting down their units. After Anshan Carbon Co. with a capacity of 25,000 tonnes in Liaoning province announced production cut by 50% in the month of July, another company Hebei North Graphite Electrode Co. with an annual production capacity of 70,000 tonnes plans to suspend production in early August.
The environmental protection policy in Hebei will become stricter two months ahead of the upcoming National Day Holiday in October when China will hold a grand military exercise in Beijing. The company might produce 2,000 tonnes in July same as in June given the fact that the company already holds inventory of around 40,000 tonnes of electrodes because of the tepid market demand. In 2019, the company plans to produce 15,000 tonnes of GE in total and the production in H1 2019 has already reached around 10,000 tonnes. In 2018, the company’s GE output was 40,000 tonnes.
Apart from these two companies, Fangda Group Hefei Carbon Co. Ltd with a production capacity of 22,000 tonnes announced production cut by 10% in late June and this was also majorly due to weak market demand. In 2018, the company produced around 21,000 tonnes and the production volume in H1 2019 was around 9,000 tonnes. They have a target to produce 20,000 tonnes in 2019.
SteelMint’s sources have informed that the GE companies in China are holding huge electrodes stock and it is likely that many more companies may opt for production cuts in the upcoming months. It is unlikely that the China’s electrodes prices may move up in next few months of 2019 (amid piled up inventories) and that the situation may improve towards the end of the year only in case of strict winter cuts and small GE companies shutting down due to losses.
The current prices of electrodes in China of 450mm UHP grade are heard to be in the range of RMB 22,000 – 23,000 tonnes (USD 3,200 – 3,300/MT) and 600mm are in the range of RMB 48,000 – 60,000/MT (USD 6,900 – 8,700/MT). The prices of 300-450mm HP grade electrodes are in the range of RMB 17,000 – 20,000/MT (USD 2,400 – 2,900/MT).
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