SteelMint has heard from its market sources that amid fall in the Chinese electrodes prices (except for this week) post Spring Festival in February, the GE offers to Europe from China has also registered plunge of USD 100-200 per tonne against last month.
The current price for 450-500mm UHP grade GE is heard to be around USD 5,300-5,600/MT, CFR Europe and is estimated to go down further by around USD 1,000/MT in next few weeks amid sufficient supply in China.
As per the market sources, GE buyers in the European market have already purchased their electrodes requirement and are currently not buying anything in anticipation that the Chinese GE prices may go down further in end month of Q1 FY19.
On the other hand, the situation has improved a bit this week in China as the GE prices stabilised this week. This happened due to gradual pick up in the domestic steel production, 20 days post-Chinese New Year Holidays.
The Graphite electrodes price forecasts
As per SteelMint estimates, the situation in China’s electrodes market is likely to remain grim till the end of winter heating season and although it is expected that demand may pick up from April month, the dramatic surge in prices like last year is less likely given the not-so strict production cuts during this heating season. As per our sources, the output curbs in the winter season of 2018 has not been as stringent as blanket production cuts in 2017. This resulted in GE manufacturers continuing their production and making ample supplies in the market.
However, on the other hand, given the surging needle coke costs, the freefall in Chinese GE prices is unlikely. Needle coke is continuing to see an upward trend with prices. As a raw material for graphite electrodes and more, the material’s international market prices currently sit at around USD 4,000–USD 4,500 per ton, representing a doubling over the same time last year and a sixfold increase over the first half of 2017.
The needle coke demand-supply imbalance
While needle coke to be used in high-quality graphite electrodes is met with around 1 MnT of global demand per year, market players say that supply capacity is just slightly below this. But pulled along by explosive demand growth for graphite electrodes, needle coke prices are continuing to surge. China’s production of electric furnace steel consequently rose by 20 MnT y-o-y to end at around 100 MnT in 2018. Compared to surging demand, however, UHP supply is seen as still playing catch-up.
Graphite electrode manufacturers have already grown their inventories of needle coke in an attempt to reach a suitable inventory level. But despite this, a number of global factors continue to drive up demand for needle coke. This includes domestic developments in China – which is carrying out several projects aimed at restarting electric furnaces or establishing new ones – as well as trends in the U.S., which is increasing its own operation of electric furnaces due to its trade frictions with China preventing it from obtaining Chinese-made electric furnace steel.
Against this backdrop, China is making efforts to increase its production of needle coke. But with a number of voices expressing concern that the quality of product here poses an issue for use in UHP graphite electrodes, these moves may not be enough to resolve the supply shortage.
There are as such no signs that the current tight supply–demand balance will dissipate, leading to the expectation that needle coke prices will remain high.
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