Posted on 29 Apr 2022
Chinese graphite electrode prices showed signs of weakening last week amid an unforeseen demand shift in the domestic market. The resumption of operations among many Chinese electric-arc-furnace (EAF) makers following COVID disruptions had fueled expectations that electrode demand would increase further, but that did not happen, market watchers commented Thursday.
As of April 27, Mysteel's benchmark price for 600mm ultra-high-power (UHP) grade electrodes in East China's Jiangsu province had decreased by Yuan 200/tonne ($30.3/t) on week to Yuan 27,000/t, while that of 350mm diameter electrodes had also declined by Yuan 500/t on week to Yuan 23,500/t, both including the 13% VAT, according to the database.
"With domestic stainless- and carbon- steelmakers restarting their EAFs, some domestic electrode makers had expected that the mills' demand for electrodes would keep rising – especially when traffic controls in many regions were gradually being lifted," a market watcher in North China's Hebei explained.
But the anticipated upsurge in purchasing hasn't eventuated, she said. Though EAF capacity utilization rates are increasing, the steelmakers' profit margins have been eroded by the drop in finished steel prices, making the mills unwilling to purchase electrodes at higher prices, according to her.
For example, the steelmaking capacity use among the 85 independent EAF mills nationwide under Mysteel's regular survey increased for the second week by 2.93 percentage points on week to 66.63% as of April 21.
Yet over the week of April 15-22, Mysteel's other survey among 40 EAF mills showed that these mills' profit margins on making and selling rebar had declined by Yuan 6/t on week to average just Yuan 29/t.
Besides the absence of the hoped-for demand revival among steelmakers, "market prices of electrodes are also in chaos," the Hebei source observed. "Some electrode sales and trading activities have been interrupted by the resurgence of COVID-19 cases. So, after watching the virus situation in some areas improve recently, some electrode makers – especially those small-sized plant whose finances are tight – lowered their offering prices in their rush to make sales and so secure some cash flow," she added.
The slide in domestic graphite electrode prices is not likely to last too long, however, as electrode production costs are still hovering at a high level and overall electrode supply remains tight, the Hebei analyst predicted.
Source:Mysteel Global
