It is expected that the return on investment in the graphite electrode market will increase at an annual growth rate of 8% from to . These are mainly determined by the increase in steel production in emerging countries and the increase in the use of electric arc furnace steelmaking. The promotion of energy conservation and environmental protection and the promotion of electric arc furnace technology in the Chinese market are expected to become an opportunity for the future market.
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As of September , the price of graphite has bottomed out, and the market price will rise slowly. It is recommended that steel mills can stock appropriately. From to , the price of graphite rose to its peak. Many graphite manufacturers expanded and increased their production capacity, and market investors also entered the market, resulting in an increase in graphite electrode inventories. The price has been falling this year.
Did you know that there are two ways to make iron? The blast furnace method and the electric arc furnace method. The electric arc furnace method recycles used iron scrap by melting it in an electric arc furnace. It is the graphite electrodes inside the furnace that actually melt the iron. Graphite has high thermal conductivity and is very resistant to heat and impact. It also has low electrical resistance, which means it can conduct the large electrical currents needed to melt iron. In recent years, graphite electrodes have been made even more efficient: they can now conduct even higher currents and more power.
Fastmarkets assessed the fortnightly price for graphite electrodes, HP, fob China at $2,300-2,400 per tonne on July 5, down $100 from $2,400-2,500 per tonne on June 21.
Fastmarkets&#; fortnightly assessment of graphite electrodes, UHP, fob China was at $2,485-3,100 per tonne on July 5, widening downward by $265 from $2,750-3,100 per tonne previously, with liquidity reported at the low end for UHP 500 mm.
Market participants unanimously agreed that slow demand is pressuring the electrodes market, both domestically and abroad. The UHP spread on Fastmarkets assessment widened to $615 per tonne on July 5 from $350 per tonne on June 21.
A deal was reported at $2,485 per tonne for UHP 550 mm, while offer prices were as high as $3,600-4,000 per tonne.
The wide gap could be attributed to the fact that producers&#; costs in China vary depending on whether they use imported or locally produced material, according to sources.
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&#;Even for the same supplier, the price could be different based on the raw materials used. Some tend to use domestic calcined needle coke, while others use imported coke, subject to the demand from their clients in different regions around the world,&#; a producer source in China told Fastmarkets.
Producers that use domestic feedstock were able to lower their offer prices in response to weak demand, while the relatively high costs of imported feedstock have narrowed margins for producers that use that material, sources said.
Prices for imported calcined needle coke were around $950-1,700 per tonne on June 29, while domestic prices stood at around 6,500-9,500 yuan ($899-1,315) per tonne on the same day.
&#;You can produce up to UHP 600 mm electrodes with the good quality domestic pet coke,&#; a trader in Europe said. &#;But electrodes prices are so low now that some producers are out of the market.&#;
&#;It is very hard for producers using imported needle coke under the present circumstances of sustained demand weakness. We don&#;t expect inquiries for material to pick up in Europe until September,&#; a second trader in Europe said.
The widening spread for UHP could also result from some cashflow factors with some trying to cash out while the market is under pressure. But this cases could be rare given that major producers are quoting prices based on the supply-demand fundamentals, a second producer in China said.
Demand for electrodes in China has been muted by weak consumption rates from the downstream steel sector.
&#;Electric arc furnaces are experiencing very limited marginal profits these days. Additionally, demand for steel remains weak. Steelmakers tend to keep inventory low during the slow summer season,&#; a source from one steelmaker in China told Fastmarkets.
&#;Steel prices may be a little higher now in China, but production remains very low,&#; the first trader in Europe said.
&#;The market is saturated in China, so graphite electrodes prices are falling. A recovery in the export market and a boost to add stimulus is needed,&#; a third trader in Europe said.
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