China: Graphite Electrodes price rise amid improved demand and rising costs

The GE (Graphite electrode) prices in China have observed a slight pickup against the backdrop of rising domestic steel demand. The prices for 450mm HP grade electrodes are currently assessed at RMB 15,000-15,500/t ($2,140-2,210/t) and 600mm UHP grade are at RMB 19,000-20,500/t ($2,900 - 3,130/t).

Steel demand has recently picked up in China as the country is spending heavily on construction activities to revive the economy. In addition to this, shortcomings in steel manufacturing via blast furnace route has supported steel production via EAF route resulting in improved demand for GE.

During the winter season, Chinese government imposes production cuts as a part of pollution control measures. Although this year restrictions are looser against the ones in 2019-20, rising iron ore cost is acting as a challenge for steel manufacturers. Taking advantage of this, EAF manufacturers are increasing their steel production despite a recent rally in scrap prices.

Moreover, the rising raw material (needle coke) cost has also prompted the manufacturers to increase their electrodes prices. At present, oil-based and coal-based needle coke prices are trending in the range of RMB 6000-7,800/t ($1,070 - 1,190/t).

Outlook

The construction progress in the northern and southern parts of China is anticipated to slow down amid intensifying winters. The steel importers also maintain low stock during the year-end. Thus, any hike in electrodes prices seems unlikely and is expected to remain stable for now.