Chinese graphite electrodes (GE) prices for HP grades jumped by RMB 10,000/t ($1,570/t) between Jan- May’21 whereas UHP grades rose by RMB 6,000/t ($940/t) during the period under review.
Prices for the 450mm HP grade are currently assessed at RMB 20,250/t ($3,200/t) whereas the 600mm UHP grade is at RMB 26,000/t ($4,100/t).
Factors like increased domestic steel production via the electric arc furnace route amid rallying iron ore costs and the momentum in economic activities post-pandemic have supported the country’s GE demand and prices.
China allows scrap imports to promote EAF steel production
After over two years of steel scrap imports restrictions, the Chinese government has allowed the same from Jan’21 but the electric arc furnaces will have to adopt the new “recycled iron-steel raw materials” standards.
The decision has been taken:
- To promote crude steel production via the EAF route amid escalating iron ore prices. The latter is used as the key raw material in blast furnaces. But, Imported Australian iron ore prices in China have rallied by 75% in the past one year. Over Jan-Apr’21, China imported 161,639 t of steel scrap in total, way above the 5,379 t imported during the first four months of last year, as per Customs data.
- To reduce carbon emissions caused due to steel production via blast furnaces. At the start of 2021, China had pledged to reach a peak in its carbon dioxide emissions before 2030 and achieve net zero carbon emissions by 2030. In line with this policy, the country has started taking several initiatives to control energy consumption under its 14th Five Year Plan for industries classified under “high-energy consumption”.
This proved to be a boon for Chinese GE manufacturers that had been dealing with sluggish demand from the second-half of 2018 due to excess supplies and limited demand.
Rising needle coke prices
Another factor responsible for the rise in GE prices is increased domestic and imported needle coke prices. In the last five months (Jan-May’21), domestic needle coke (both petroleum and coal-based) prices in China have risen by 57% to RMB 11,000/t ($1,730/t) whereas imported ones are up by 18% to $1,300/t. Higher demand from both the electric vehicles battery and GE segments are driving up needle coke prices in China.
What’s happening in Indian market?
In India, prices for 600mm UHP grade electrodes are being assessed at INR 2,80,000-2,95,000/t ($3,860 – 4,065/t) whereas that for the 450mm HP grade is assessed at INR 2,25000/t ($3,100/t).
US sanctions on Chinese GE producer Kaifeng Carbon that used to supply UHP grade electrodes to steel manufacturers in India at competitive rates, has provided an opportunity to Indian GE manufacturers to fill in this space. With China focusing on its domestic demand, imports of Chinese electrodes have become almost negligible.
It is also expected that electrode prices in the Indian market would increase from the July’21 quarter due to an anticipated rise in imported needle coke price.
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