SteelMint has gathered some of the major takeaways from ‘The Graphite Electrode and EAF Conference’ hosted by ICCarbon and supported by SteelMint during March 28-30. The conference was attended by key Graphite Electrode manufacturers like Fangda Carbon, Pingmei Shenma and CIMM among several other Chinese Graphite Electrode manufacturers.
1) EAF Gaining Popularity But Hot Metal To Be Used With Steel Scrap
Most of the EAFs in China use liquid iron, up to 85% of the total charge, whereby, dependency on Graphite Electrode is considerably low in China’s EAFs as they charge a very high ratio of hot metal compared to the Scrap input. Moreover, the Chinese are building furnaces which can flexibly switch between hot metal and steel scrap to deal with the volatility in supply of different raw materials and changing environmental regulations.
2) Graphite Electrode Production to Increase in China
From our recent trip to China for the above-mentioned conference, we are now of the view that graphite electrode production volumes in China are going to increase. Graphite electrode manufacturers that are able to clear environmental regulatory hurdles look likely to install more production capacity in 2018-2020. We were able to confirm that companies that are properly compliant with environmental regulations have been adding production capacity since the latter half of 2017.
3) Supply of Needle Coke to Improve
Supply shortages for needle coke (key raw material for graphite electrodes production) look likely to gradually ease going forward as a result of Chinese producers and major Needle Coke producers globally alike are increasing their needle coke output. For instance, there are some mid-sized petroleum refineries in Shandong Province that have made use of their plentiful petroleum products to conduct R&D into needle coke, and are now increasing their output of petroleum-based needle coke. Also, there are coal producers in Shanxi Province that are looking to put their ample coal resources to use in increasing production of coal-based needle coke.
4) China Produces UHP Grade of Graphite Electrode
Contrary to popular belief or what is being advocated in India, China does actually produce Graphite Electrode of UHP grade up to diameter of 650 mm. It was apparent to us on this trip to China when the Chinese producers were offering UHP grade of Electrode. We learned that there are about 10 graphite electrode manufacturers in China producing UHP grade of graphite electrodes.
5) Graphite Electrode Prices to Start Retreating in 2019
Although, supply-demand is still tight, and needle coke supply shortages are still a constraint on graphite electrode production, but soon needle coke supply will start easing (which has been the major bottleneck and prime reason for soaring Graphite Electrode prices), we expect the production of graphite electrodes to increase, which will further lead to Graphite Electrode prices to traverse downwards as the demand-supply imbalance corrects itself.
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