China’s domestic graphite electrode prices of two popular sizes 600mm and 450mm has diverged recently. While the price for 600mm ultra-high-power (UHP) grade graphite electrodes declined by another Yuan 4,000/MT (USD 571/MT) to hit a 31.5-month low of RMB 29,000/MT, the prices for small-sized graphite electrodes such as 400mm diameter in the same region rebounded by Yuan 1,000/MT to reach Yuan 14,000/MT as of the same day, both including the 13% VAT, Mysteel’s data shows.
Over the survey period, some EAF steelmakers purchased electrodes for replenishment, fearing that trading and logistics will be disrupted or even come to a standstill during the Chinese New Year (CNY) holiday over January 24-30. Among those being bought, small-sized graphite electrodes are much more attractive to steel mills as the prices are cheaper and generally stable.
“Demand for small-diameter electrodes from mills has increased markedly recently. In fact, our order books are full until the end of CNY,” admitted an electrode company official from Southwest China’s Sichuan province. “We are considering raising our offers as our stocks at hand are insufficient,” he added.
Due to the earlier thinning of profit margins, some electrode producers chose to halt operations and draw down their stocks instead to cut costs and generate more profit. If demand for small-sized electrodes remains firm in the next few weeks, electrode supply will tighten, chiefly because at least three months are needed to produce one batch of graphite electrodes. As a result, prices for electrodes below 500mm meter are likely to increase further, according to a Shanghai-based market watcher. At the same time, prices for UHP grade electrodes continue to weaken, Mysteel Global noted.
“It is hard to see any improvement in the long-term weakness in UHP grade electrode prices in the near term,” the Shanghai analyst said. Demand for electrodes above 600mm diameter remains low. In addition, the increasing demand for small-sized electrodes will also erode the market share of larger diameter electrodes, undermining their prices further, he predicted.
This article has been published under article exchange agreement between SteelMint and Mysteel Global
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