Graphite Electrode Prices to Surge Further?

The bull rally in prices of graphite electrodes, that had troubled steel makers throughout 2017, may likely continue in 2018 and might even hit new highs. Experts from the graphite electrode industry observed at a recently held seminar organised by International Rare Metal & Recycling Study Group in Japan, titled “Stainless Steel, Electric Furnace Steel, Electrode Market 2017 & Outlook 2018”, that the supply constraints would continue to boost prices of Ultra High Power grade graphite electrode used by Electric Arc Furnace operators.

It may be recalled that wide spread crack down on polluting industries such as graphite electrode factories near major cities in China, and the subsequent mushrooming of electric arc furnaces which are the primary consumers of the graphite electrode rods sent prices of the vital steel making component skyrocketing during 2017.

Highlights from the Conference with inputs from Japanese publication Iru-Miru.

Graphite Electrodes outlook 2018
Graphite electrodes manufactured in China use a maximum of 25% needle coke and therefore are inferior in quality as compared to the graphite electrodes produced by the 8 major global manufacturers. The Chinese graphite electrodes are used for Ladle refining furnaces where as the superior quality products from the other manufacturers are used in EAF for steel production.

Prices of superior quality graphite electrodes are likely to rise where as prices for those manufactured in China may dip. Experts estimate the price may even shoot up as high as close to USD 9000 for EAF graphite electrodes.

Dual Structure in Electrode Market

Graphite Electrodes, the vital component of steel making in Electric Arc Furnaces, after giving steel makers a nightmarish experience during 2017 due to rapidly increasing prices would continue to remain high in 2018 and may even marginally rise further.

According to Mr Wake a representative of Ark Carbon Trading Co. Ltd. prices cannot respond to increasing or decreasing demand and there they might rise. In China, regulations continue to be severe and as result of which electrode prices have remained supported after a brief fall.

Reorganization of the market

In 2012, the production capacity of the eight major companies was over 900,000 tons, but it was reduced to 780,000 tonnes in 2016, and industry reorganization began to be explored. And in 2017 production dipped further to 774,000

China ‘s environmental regulations have been strengthened and regional Induction Furnaces have been shut, initiating a major shift towards EAF steel making. The supply and demand balance collapsed and the electrode shortage occurred. Demand concentrated on the electrodes of Japan and the US in the summer.

However, panic buying started without Japan and the United States being able to respond. The reason why Japan and the United States could not respond was shortage of needle coke. Especially the US needle coke production was hit in the aftermath of a hurricane in the gulf of Mexico in which needle coke production facilities were damaged.

Major Manufacturers of Electrode(Qty in 000 tonnes)

Major move in the graphite electrode market

Domestic Electrode Market in Japan between 2014 and 2016 (Qty in MT)