According to the SteelMint market sources, the prices of Chinese origin UHP grade graphite electrode (GE) of high diameter (500-700mm) has picked up this week by RMB 5,000-15,000/MT (USD 786-2,360/MT). The 550mm UHP grade GE is currently being offered at RMB 100,000-125,000/MT (USD 15,700-19,650/MT) and 600mm is trending at RMB 110,000-140,000/MT (USD 17,290 – 22,000/MT).
The key reasons for such a price surge is increase in the operating rates of plants using electric arc furnaces (EAFs) in Fujian province amid rise in steel prices and the addition of new EAFs with the capacity of more than 70 tonnes boosting demand for 500-600 mm UHP grade GE.
Fujian is one of the key steel producing province in south-eastern China. As a part of China’s supply-side reforms, Fujian province has achieved its steel and coal production cut target in 2017 by banning 35 enterprises producing substandard steel with a total capacity of 5.35 MnT and closing 36 coal mines with annual capacity of 2.22 MnT. The 76 zombie enterprises were also disposed of by the means of merger, restructuring, development, support, and withdrawal after bankruptcy.
However, despite these supply-side measures, the market report suggests that few capacities from China’s Baoding province have been transferred to Fujian once again adding to Fujian’s steel capacity. Baoding situated in Hebei province had eight steel mills, all contributing to China’s status as the world’s biggest producer. However, as part of the government’s efforts to clean up the environment around Beijing and reduce steel capacity, Baoding’s mills were shut down and few capacities have been transferred to Fujian province.
The prices of small diameter graphite electrodes have edged down marginally. The prices prevailing for 450mm UHP grade graphite electrode is RMB 70,000-80,000/MT (USD 11,000 – 12,570/MT). In case of raw material, the needle coke prices have remained stable this week.
The market sentiments in Chinese steel market remained complicated this week in the face of volatile market conditions, lingering risk of U.S.-China trade friction, a slate of policies pushing for environmental protection against rising pollution, production restrictions and synchronous recovery in both supply and demand.
Domestic construction steel price in China has been high and volatile this week, and in the short term, it is expected to go through a small adjustment, which consequently has driven some electric steelmaking enterprises to raise the operating rate.
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