Mysteel: China UHP graphite electrode prices set to weaken?

Mysteel Global: Chinese prices of ultra-high-power (UHP) graphite electrodes are expected to continue their downtrend this month as steelmakers push for lower input costs, according to a recent Mysteel report. The report also suggests that the cost support for these prices will likely weaken further.

Last month, domestic prices of UHP graphite electrodes dropped steadily, even though those of ferrous products had generally strengthened and despite the fact that steelmakers' demand for feed materials picked up towards the end of the month, Mysteel Global noted.

By 30 September, the composite price for 350mm diameter UHP graphite electrodes in East China's Jiangsu was assessed by Mysteel at yuan 13,600/tonne ($1,923/t), down by yuan 400/t or 2.9% on month, while that for 600mm electrodes was lower by 1.3% on month at yuan 15,300/t, both excluding the 13% VAT. So far in October, these prices have remained unchanged, Mysteel's data showed.

Graphite electrode consumption among domestic electric-arc-furnace (EAF) steel producers increased last month, with the mills ramping up production after seeing their profit margins recover, according to Mysteel's report.

However, the steelmakers continue to press the electrode producers to reduce their selling prices, as reported. The increases in steel prices were mainly driven by bullish market sentiment, the report observed, while the recovery in actual steel demand was limited. Consequently, the steelmakers dared not spend more money on raw materials.

For this month, the EAF mills will probably try to shave their production costs further to ensure that they can still make some money when selling their output, the report predicted.

On the other hand, prices of raw materials used in producing UHP graphite electrodes such as petroleum coke and coal-tar pitch are expected to retreat this month from September's climb, under the pressure of the relatively high inventories of these materials being held by suppliers, the report observed. This will also place pressure on electrode prices.

By 9 October, the price of medium-temperature coal-tar pitch in North China's Hebei was assessed by Mysteel at yuan 4,200/t including the 13% VAT, unchanged from the end of September.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.