The pessimism in China’s downstream steel demand and EAF operating rates is compelling the country’s graphite electrodes prices to remain weak.
The current price of 450mm HP grade GE are heard to be in the range of RMB 13,000 – 15,000/MT (USD 1,825 – 2,100/MT) whereas that of UHP grade electrodes of size 500mm are in the range of RMB 15,000 – 22,000/MT (USD 2,100 – 3,090/MT)and 600mm are in the range of RMB 42,000 – 53,000/MT (USD 5,900 – 7,400/MT).
As per the market sources, China’s electric arc furnace (EAF) steelmakers have slowed their production in early November, pressured by long-term losses amid tightness of feedstock steel scrap. The average operating rates across EAF steelmakers stands to be at 55%, down 2% from a month ago and down by sharp 20% from last year.
Since the second half of the year, EAF steel mills in China have struggled with the rising costs of raw material steel scrap and weak prices of spot steel. While steel prices recently picked up, most of the EAF steelmakers still faced losses.
About half of steel plants in east and south-west China, where most EAF steelmakers are located, reported lower production as they failed to secure scrap resources. The country’s scrap market was significantly tightened up by brisk demand from blast furnaces due to higher profits and domestic stricter controls on waste imports.
Since 1 Jul’19, eight types of solid waste including steel scrap were recategorized into restricted imports that can be used as raw materials. China began requiring import licences for scrap from 1 July. In September it set a quota of only 1,770 tonnes of ferrous scrap imports for October-December. This ban of ferrous scrap imports has intensified supply shortages in China.
As per the market forecasts, the year-over-year lower operating rates at EAF steel mills is likely to sustain as profits at these producers will be hard to improve in the short term, resulting which the GE demand and prices in China will remain under pressure.
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