Nearly 30% price increase within the year, insufficient supply, and rising prices of graphite electrodes

The price increase of graphite electrodes is not only due to rising costs, but also related to weakened industry supply.

Since the beginning of this year, the upstream petroleum coke price of graphite electrodes has continued to rise. As of April 28th, the price of low sulfur petroleum coke has generally increased by 2700-3680 yuan/ton compared to the beginning of the year, with a comprehensive increase of about 57.18%. Since last year, due to the booming negative electrode material market, negative electrode material enterprises have a high demand for graphitization and graphite crucibles. Some graphite electrode enterprises have shifted to negative electrode graphitization and negative electrode crucibles due to the impact of profit, resulting in a shortage of resources for graphitization and calcination processes in the graphite electrode market, and an increase in graphite electrode graphitization costs.

Starting from October 2021, due to environmental production restrictions in autumn and winter and the impact of the epidemic, the production of graphite electrodes in the market has been continuously restricted; As of the end of March, the overall operating rate of the graphite electrode market is about 50%. Under the dual pressure of high costs and weak downstream demand, some small and medium-sized graphite electrode enterprises lack production power. Meanwhile, in the first quarter, China’s import of needle coke decreased by about 70% year-on-year, and the overall production of graphite electrode market was insufficient.

Graphite electrode material is an important material for electric furnace steelmaking, and graphite is used as electrode material in steelmaking, accounting for about 70% to 80% of the total usage of graphite electrodes in China. Due to the fact that electric furnace steelmaking is more environmentally friendly than blast furnace steelmaking, there has been a significant shift in policy towards electric furnace steelmaking in recent years. In 2021, the proportion of electric furnace steel in China’s total crude steel production increased to 15%, an increase of 5 percentage points compared to 2020. The increase in the proportion of electric furnace steel is driving the demand for graphite electrodes. In the context of carbon neutrality, the proportion of electric furnace steel may accelerate, and it is expected that the demand for graphite electrode industry will continue to rise.