Where are the Chinese Graphite Electrodes Prices Headed?

After registering a fall for about four months from Nov’18, the graphite electrodes (GE) prices in China stabilised a bit last month with minor fluctuations and continuing the similar trend the GE prices in April month registered a slight plunge initially and subsequently turned stable.

According to SteelMint sources, the current prices for UHP grade 450mm GE is about RMB 38,000 – 40,000 (USD 5,600 – 5,900/MT) whereas that of 600mm sized GE is trending at RMB 58,000 – 60,000 (USD 8,600 -8,900/MT). The price for HP grade 450mm electrodes is heard to be at RMB 27,000 – 30,000/MT (USD 4,025 – 4,400/MT).

The inventory for GE at present in China is large and there is tough competition amongst the domestic manufacturers to export their produce. However, the overseas demand for GE is stable and is predicted to remain stable in the coming weeks given the high raw material (needle coke) costs. As per the industry sources, the GE prices in China have bottomed out and are unlikely to fall further given the fact that if prices plunge down more than the current levels, many GE units would have to shut down as their minimal profits will turn into losses which will then once again improve the demand-supply dynamics of graphite electrodes in the country.

Amid the supply side, structural changes in China the supply of electrodes from China has started to increase since the latter half of 2017. In 2017, the GE production increased by 16% against 2016 and in 2018, the country produced about 700,000 tonne of electrodes registering an increase of 19% y-o-y basis.

Further supply is expected to expand sharply due to new facility investment during 2019 – 2020. One of the largest plants that are coming up Baofang Carbon Material Technology, a joint venture between Baosteel Group and Fangda Carbon. It is scheduled to start operation in Lanzhou in 2020, and is capable of producing 100,000 tonne per year of UHP grade GE.

Another major plant that is coming up is Tangshan Dongri New Energy Materials Co. Ltd that has combined needle coke and GE plant capacity of 300,000 tonnes per year in Laoting Economic Development Zone. The total investment planned in the same is about RMB 6 billion and the plant is expected to produce 200,000 tonne of coal-tar pitch needle coke as well as 100,000 tonne of UHP grade graphite electrodes. The first phase of the project is expected to commission in latter half of 2019.