Graphite Electrode price plunge slows China's Expansion Projects

The continuing decline in graphite electrode prices across China has led some domestic electrode manufacturers to rethink their plans for new plants or expansion projects, Mysteel Global has learned.

According to a survey by ICCSINO, a leading platform for online information and trade relating to China's graphite carbon industry, electrode producers in Sichuan province in Southwest China, Henan in Central China and Hebei in North China are having second thoughts about whether to push ahead with their projects.

"Since (last year's) Chinese New Year period in mid-February, China's electrode price has experienced continuous falls, which weakened the confidence of electrode makers to develop new capacity," explained a Shanghai-based market source. "In the meantime, we have noticed that the plunge in electrode exports from last October prompted electrode manufacturers to put back their plans for new projects or expansions further or are controlling production or even temporarily suspending output to reduce losses," she added.

In October 2019, China's exports of graphite electrodes declined to 26,600 tonnes, or down by a huge 43.59% on month, according to statistics from China Carbon Industry Association (CCIA).

As of January 8, the price of 600mm ultra-high-power (UHP) graphite electrodes in East China's Jiangsu province, for example, had slumped to Yuan 26,000/tonne (USD 3,714/MT) including the 13% VAT, hitting a near 32-month low since May 15 2017, according to Mysteel's database.

However, considering Beijing's call for a greener economy and for manufacturers to be more eco-friendly, much more steel scrap will be used in steelmaking in the long run, thus resulting in an increase in electrode demand, Mysteel Global was told.

In 2020, Mysteel calculates that 5.7 MnT of electric arc furnace capacity will be newly added in China, with the country's steel scrap consumption likely to increase to 262 MnT this year, as reported. China's graphite electrode capacity was thought to have reached 1.93 million tonnes in 2019, up 38% on year. Accordingly, electrode production was seen growing by 26% from 2018 to reach 1.19 MnT, ICCSINO's study shows.

This article has been published under the article exchange agreement between SteelMint and Mysteel Global