Graphite Electrode: Fangda Carbon Books Robust Profits in First Half of 2018

China's graphite electrode major, Fangda Carbon has released its semi-annual report for the year 2018 and as per the report the company has realized operating revenue of RMB 6.08 billion (USD 892 million) during Jan-Jun'18, an increase of 235.42% against the corresponding period of previous year. In terms of profits, the company's net profits have been recorded at RMB 1.17 billion (USD 171.66 million), a rise of 669% year on year basis.

Soaring demand for graphite electrode worldwide has helped Fangda Carbon to achieve the astronomical rise in revenues and profits both especially since the latter half of 2017. In parallel to the robust demand, the tightening supply for the electrodes also has been contributing towards the massive profitability of the Graphite Electrode companies. Stringent environmental norms had led to the closure of many electrode plants in China, thus the electrodes prices have jumped manifolds, driven by the prevailing demand from steel mills across the world.

Profitability of Fangda Carbon for the complete year 2018 and also for next few years is likely to remain at high levels as the supply tightness will persist and demand will strengthen further as new Electric Arc based steel facilities are coming up. Also even though new electrode capacities are coming up, the production cycles of graphite electrode plants are usually long (2 to 2.5 years) which means that the GE manufacturers including Fangda Carbon will continue to reap profits during the intervening period.

Fangda Carbon which is headquartered in Lanzhou city of Gansu province is China's leading graphite electrodes manufacturer along with producing various other carbon products. The company's current graphite electrode capacity is 10,000 tonnes.

Amid the GE supply tightness, Fangda Carbon along with Shanghai Baosteel Chemical Co. Ltd (a subsidiary of Baosteel Group) has come together to jointly set up a UHP (Ultra-High Power) grade graphite electrode plant under the name of 'Boafang Carbon Material Technology Co. Ltd'.

The capacity of this unit is expected to be around 100,000 tonnes per year and is planned to put into operations by 2020. The registered capital of this joint venture is RMB 1.3 billion (USD 190 million) with Baosteel Chemicals having 51% shares in the new company. The project is to be set up in Honggu Park of Lanzhou Economic and Technological Development Zone in Gansu province in Northwest China and the total investment estimated in the feasibility study of the project is RMB 2.7 billion (USD 392 million).