Are China's Graphite Electrode Prices on their Road to Recovery?

China's market for graphite electrodes remains generally weak, with Mysteel's benchmark price for 600mm ultra-high-power (UHP) grade electrodes in East China's Jiangsu province as of May 13 still at its 36-month low of Yuan 21,000/tonne ($3,000/t) including the 13% VAT, according to Mysteel's database. However, a pickup in sales of electrodes and a decrease in output are likely to prompt a slight recovery in the near term, market sources commented Thursday.

Chinese prices for UHP-grade graphite electrodes have been steadily losing ground since the beginning of last year. In addition, the sluggish purchasing demand among domestic electric-arc-furnace (EAF) mills and the slide in electrode exports since last February continue to pummel electrode prices, Mysteel Global noted.

"Although prices currently are at their lowest since mid-2017, we might expect to see some signs of a rebound soon as such low prices are actually encouraging some EAF producers to purchase electrodes for replenishment," a market watcher in North China's Hebei province commented.

At the same time, thanks to the recent strong demand from steel users, Mysteel data shows that run rates and capacity utilization among China's independent EAF mills have returned to the levels seen at the end of last year. For example, Mysteel's latest weekly survey showed that as of May 7, capacity utilization among the 53 independent EAF steelmakers it charts nationwide surged by 9.18 percentage points on month to 56.32%.

"We have received many inquiries from steel mills recently," an electrode company official from Southwest China's Sichuan province told Mysteel.

"The steelmakers are showing strong interest in rebuilding their inventories, which gave us some confidence and boosted the market. Also, besides domestic inquiries we have also received some expressions of interest from buyers in the Middle East," he added.

On the other hand, the COVID-19 outbreak and the languishing market demand for their products left many Chinese electrode producers with little alternative but to temporarily halt production.

Output of graphite electrodes at 18 major surveyed producers across China totalled 167,800 tonnes over January to April, down 19.13% on year, according to data from Iccsino.com, a well-recognized online portal for information and trading relating to China's graphite carbon industry.

This article has been exchnaged under article exchange agreement between SteelMint and Mysteel Global