This Week’s Commentary: This week, the domestic graphite electrode market has remained stable with upward trends. Following concentrated price hikes by leading manufacturers last weekend, a batch of smaller and medium-sized manufacturers have also successively raised their prices this week, with increases ranging mostly from 500 to 1,000 yuan per ton. Currently, the mainstream quoted prices on the market are as follows: for UHP450mm electrodes with 30% needle coke content, the price ranges from 24,500 to 25,000 yuan per ton; for UHP600mm electrodes, the mainstream quoted price is between 27,500 and 28,500 yuan per ton; and for UHP700mm electrodes, the quoted price ranges from 32,000 to 33,000 yuan per ton.

From the perspective of actual transaction activity, the steel market demand has been noticeably constrained by the recent epidemic. Moreover, some short-process steel mills had already increased their inventories in advance during February, meaning graphite electrode stocks can last at least until late April. As a result, market participants are temporarily adopting a wait-and-see approach, and trading volumes in high-price regions remain limited.

Although the recent pandemic has affected electrode manufacturers’ procurement and shipments, most manufacturers remain relatively confident about the second-quarter market. The likelihood of oil prices falling in the short term is low, and given that electric furnace steel plants are operating at relatively low capacity utilization rates, electrode prices have continued to rise. Once steel demand improves in the second quarter and electric furnace steel plants resume higher operating rates, this could provide a boost to the electrode market. It is expected that, in the short term, the graphite electrode market will mainly remain stable at high levels, absorbing the previous price increases.

China Graphite Electrode Price Index (March 24)

Upstream Market Dynamics:

Affected by the larger-than-expected decline in U.S. commercial crude oil inventories, international crude oil prices strengthened again this week, with Brent crude oil prices rising above $120 per barrel by Thursday. Driven by this trend, domestic raw material prices remained stable with a slight upward bias this week. In Northeast China, several leading petroleum coke producers once again raised their prices by 300 yuan to between 6,500 yuan per ton. In Shandong, leading producers of needle coke from the oil-based series maintained their quoted prices at between 12,500 and 13,500 yuan per ton, and the support for graphite electrode prices remains strong.

Downstream Market Dynamics:

On the demand side from steel mills: This week, transactions in the domestic steel market remained sluggish, with prices experiencing mainly slight fluctuations. Due to the combined impact of the pandemic and tax reforms, scrap steel continues to be in short supply, driving up prices and further widening losses for electric-furnace steel mills. This week, the capacity utilization rate of 135 electric-furnace steel plants nationwide was 53.19%, down 0.09% from the previous week. The long-process sector, by contrast, remains relatively strong, with output continuing to show a steady upward trend. This week, the steel industry’s total demand for graphite electrodes increased by 0.87% compared to the previous week.

On the non-steel demand side: This week, domestic industrial silicon prices showed a downward trend from their previous high levels. Downstream users have been purchasing sparingly at these elevated prices, and some traders have become increasingly eager to sell off their inventories for cash. As a result, prices have cumulatively fallen by around 1,000 yuan compared to last weekend. Meanwhile, several small- and medium-sized silicon plants have slowed down their production pace as profits have significantly shrunk. This week, the yellow phosphorus market has halted its decline and begun to rebound. Due to tight supplies of upstream phosphate rock resources, the market’s price center has once again shifted upward. Downstream users have been actively placing inquiries, and market sentiment remains positive.

Comprehensive Forecast:

Recently, international oil prices have remained persistently high, and coupled with rising transportation costs due to the pandemic (particularly the shortage of China VI emission standard vehicles), this continues to provide strong support for graphite electrode prices. Meanwhile, steel mills using long-process production methods have recently ramped up output significantly, partially offsetting the impact of loss-making electric arc furnace steel mills’ production cuts. As a result, overall demand for graphite electrodes has remained stable with a slight upward trend. However, given the intensified COVID-19 prevention and control measures currently in place, and the fact that the number of private real estate developers facing credit crises has now expanded to 24, steel market demand has fallen short of expectations. Market sentiment is characterized by heightened caution, which in turn affects buyers’ willingness to accept higher raw material prices. It is expected that domestic graphite electrode prices will remain largely stable in the short term.