Graphite electrode prices in China are gaining strength on the back of rising steel demand, surging needle coke prices and supply tightness of electrodes.The pr
Graphite electrode prices in China are gaining strength on the back of rising steel demand, surging needle coke prices and supply tightness of electrodes.
The prices of ultra-high power 600mm UHP grade GE is currently assessed at RMB 23,000/t ($3,510/t) and that of HP grade 450mm is assessed at $18,000/t ($2,750/t). Other specifications of electrodes have also been adjusted to varying degrees and the market situation has improved.
China's increased steel production
China has allowed imports of scrap since the start of 2021, which has led to increased steel production via EAF route which is currently trending at 72% against the lows of 40% last year due to COVID-19 pandemic. In addition to this, Chinese steel demand has been increasing since late February post-Lunar New Year as domestic construction activities ramped up, supporting electrodes demand and prices.
Supply tightness of electrodes
Another factor contributing to the rise in GE prices is supply tightness of electrodes, according to market sources. As the production cycle for electrodes is long and downstream demand has turned strong especially in past one month, there is increased urge from steel manufacturers to stock up electrodes. There is still a time gap in electrodes availability in sufficient quantity, subsequently supporting GE prices.
Needle coke prices shoot up
Needle coke, a key raw material for electrodes has recorded an increase of 38% in last six months. While coal-tar based needle coke prices are trending at RMB 8,000/t ($1,220/t), petroleum-based needle coke price is trending at RMB 10,000/t (1,530/t). The increased demand for needle coke from electric vehicles as well as both GE segment has pushed up needle coke prices in China.
Outlook
GE prices in China are expected to remain firm in the coming days amid optimistic domestic steel demand outlook supported by steady economic recovery and high levels of infrastructure investment. In the long run, market reports suggest that China's EAF, steelmaking capacity will increase by 14.3 mn t in 2021 to about 196 mn t, accounting for 15% of China's total crude steel capacity which would further support GE demand in the country.
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