China's Graphite Electrode Prices remain Subdued before National Day Holidays

The graphite electrodes market of China continues to remain weak ahead of upcoming National Day Holidays starting from 1 October 2019. With the continuous strengthening of environmental protection, the production limit of graphite electrode production has been implemented and the operating capacity has been reduced. However, due to serious market inventories and weak downstream demand, this rectification measure has not fundamentally solved the market situation.

In terms of steel demand, two major Chinese provinces Hebei and Shandong have ordered the mills to reduce their steel output by up to 50% in the run up to China's National Day holidays.

Five mills in Shandong were ordered Monday to suspend 15%, 40%, 50%, 50% and 100% of steel capacity, respectively, over September 23 to October 3 to guarantee clear skies for the National Day celebration on October 1.

In Handan city in Hebei province, local sources said formal orders were expected to be issued in the next couple of days, and local mills were preparing to suspend most of their ironmaking capacity until October 3. Mills in the city have had their recent output cut by an average of 54%, reducing pig iron production by 39,000 tonnes per day.

The output cut plan in Hebei's Tangshan is more ambiguous with steel mills being notified to prepare for output cuts at both blast furnaces and sintering plants from September 24 until mid-March 2020.

The strengthened output cuts in Chinese key steel producing provinces are likely to adversely impact the country's metal production and so does the GE demand and its prices.

The present prices for GE of size 600mm UHP grade are heard to be in the range of RMB 42,000 - 53,000/MT (USD 5,900 - 7,400/MT) and that of 450mm are in the range of RMB 13,000 - 15,000/MT (USD 1,800 - 2,100/MT). The price for HP grade electrodes of size 450mm are between RMB 13,000 - 14,500/MT (USD 1,800 - 2,000/MT).