China: GE prices fall amid weak steel demand, cooling raw material rate

China's graphite electrodes (GE) prices registered a fall of RMB 1,000/t ($157/t) m-o-m in Dec'21. Prices for the 450mm HP grade electrodes were assessed at RMB 20,000 - 21,000/t ($3,140-3,295/t) whereas that for 600mm UHP grade are at RMB 24,500-25,500/t ($3,845 - 4,000/t).

Chinese GE prices fell this month due to weak demand from the steel sector and pressure to clear inventory towards the end of the year.

China's real estate and construction sectors are seeing a dip in growth from Oct'21 for the first time since the onset of the pandemic as there is increased crackdown on the country's ailing property industry. The construction sector accounts for about 50% of China's steel consumption.

Another reason for the drop in GE prices is the cooling off of needle coke prices. After attaining peaks in Oct-Nov'21, domestic thermal coal prices plunged 62% in December with the Chinese government's intervention. This led to a fall of RMB 2,000-2,500/t ($313-392/t) in the country's domestic needle coke prices too. It may be mentioned that thermal coal is a key raw material for manufacturing needle coke. The average prices for oil and coal-based needle coke are currently assessed at RMB 6,500-7,500/t ($1,020 - 1,180/t).

China's GE exports in CY'21

China's GE exports during Jan-Oct'21 rose 28% y-o-y to 0.34 mn t while its average export prices during the said period rose by RMB 2,436/t, up 3% y-o-y. The highest export volumes went to Russia followed by Turkey, and South Korea.

Short-term outlook

China's GE prices are expected to fall in the coming weeks as the electric steel mills have kept sufficient stock and coal prices have also stabilised further, supporting needle coke prices. Another reason is that in Jan'22, steel demand would also cool off further with the upcoming Chinese New Year holidays.