China's Graphite Electrodes Market continues to remain Quiet

The graphite electrode prices in China have turned stable in the past few weeks after plunging for almost six months and the reason being no major change in the country's GE demand or supply dynamics.

The current prices in China of UHP grade GE of size 450mm are heard to be in the range of RMB 26,000 - 28,000/MT (USD 3,800 - 4,100/MT) whereas that of size 600mm are in the range of RMB 48,000 - 53,000/MT (USD 7,000 - 7,700/MT). The price of HP grade electrode of 400mm is in the range of RMB 22,000 - 24,000/MT (USD 3,200 - 3,520/MT), according to China based CBC data.

However, one fact that is bothering the country's domestic electrodes manufacturers is reducing profits due to no upward trend in the GE prices since last November. The sentiments in China's electrodes market continues to remain weak, manufacturers are maintaining old customers, the new orders are light and inventories have piled up with the producers.

Despite the fact that the electrodes prices in China in 2019 have fallen against last year, the current offers are still higher than the price levels of 2017. The supply-side reforms in China in the latter half of 2017 has made the price rise inevitable. This surge in prices continued till 2018 amid positive downstream steel demand and higher profits.

In 2018, China exported 332,200 tonnes of graphite electrodes. Russia, United States, Italy, Iran and South Korea were the main destinations for China's graphite electrode exports in 2018.

Although the Chinese graphite electrode prices slumped in 2019, the export situation was relatively stable. In the first quarter of 2019, China's graphite electrode exports were 76,200 tonnes, an increase of 9.33% over the same period last year. The countries with more export volume in Q1 2019 were Russia, Oman, Malaysia and Turkey. The escalated trade war between U.S. and China has led to increase in import duty of GE imports into U.S. from 10% to 25% resulting in excess availability of GE in China's domestic market.

The industry participants believe that in the current market situation many new graphite electrode manufacturers have slowed down their production, temporarily holding a wait-and-see attitude. It is expected that short-term prices will fluctuate and the upward resistance will be large.