Recently, the prices of graphite electrode raw materials have risen, while downstream steel market prices have been gradually increasing. At the same time, overall graphite electrode inventories in the market are currently declining at a slow pace, and supply and demand are gradually moving toward balance. As a result, the graphite electrode market may soon experience a brief rebound.
Recently, the prices of raw materials for graphite electrodes have risen, while downstream steel market prices have been gradually increasing. At the same time, the overall inventory of graphite electrodes in the market is currently declining at a slow pace, and supply and demand are gradually moving toward equilibrium. As a result, the graphite electrode market may soon experience a brief rebound. The specific factors influencing this trend are as follows:
1. The domestic epidemic is under stable control, and China’s economy demonstrates strong resilience.
In 2020, the global economy declined due to the impact of the COVID-19 pandemic. However, thanks to timely epidemic control measures and well-planned response strategies, China has now largely brought the situation under effective control. In terms of the economy and the resumption of production and business activities by real enterprises, China has also been among the first to emerge from the shadow of the pandemic. Judging from various economic indicators and industrial production indices, China’s economy demonstrates strong resilience and is well-equipped to cope with risks.
2. Steel production is increasing, steel prices are rising, and the graphite electrode market continues to suffer losses.
Although the global economy declined in 2020 and overseas steel mills generally experienced reduced operational rates due to the outbreak of the pandemic, China’s crude steel production continued to maintain a steady growth trend. Since March, rebar prices have been steadily rising, with an overall increase of 11.11% as of September 5. Meanwhile, the graphite electrode market has seen continuously declining prices, largely due to an abundant supply. As of September 5, graphite electrode prices had fallen by about 18.36% overall, with ultra-high small-size electrodes experiencing a decline of 16.67% and ultra-high large-size electrodes dropping by 38.18%. As a result, enterprises have suffered significant losses in this sector.
3. After prolonged consumption, the graphite electrode market is reaching the point of supply-demand equilibrium.
Since 2019, the Chinese graphite electrode market has experienced an overall situation of relatively oversupplied conditions, and graphite electrode companies have been effectively controlling their production levels. Since the Spring Festival in 2020, affected by factors such as the pandemic, the graphite electrode market has remained sluggish, with graphite electrode companies operating at low capacity utilization rates. As a result, the industry’s overall operating rate has been significantly lower than the level observed during the same period in 2019. Currently, graphite electrode companies are primarily focused on depleting their existing inventories. As of now, supply in the ultra-small specification market for refining furnaces remains tight, while supply in the ultra-large specification market is approaching the point of supply-demand equilibrium. Therefore, overall, a shift in market dynamics is imminent.
4. The operating rate of needle coke raw materials remains low, and the price of low-sulfur petroleum coke is rising rapidly.
Currently, the average operating rate of needle coke enterprises in China is about 43%. With the exception of Baowu Carbon Materials, which resumed operations at the end of August, enterprises still undergoing maintenance include Henan Baoshun, Xuyang Jinzhou, HuaHang Energy, Zaozhuang Zhenxing, and Fangda Xike Mo. Affected by the sluggish downstream market, these companies are all currently depleting their existing inventories.
The price of low-sulfur petroleum coke continues to rise. Recently, the quoted price for low-sulfur petroleum coke has reached 1,700 yuan per ton, an increase of 17.24% from the previous level of 1,450 yuan per ton—a notably significant rise. Coupled with the calcination costs incurred by enterprises (estimated at 300 yuan per ton), the total cost per ton will reach 2,150 yuan.
The rise in the price of low-sulfur petroleum coke will provide a certain boost to the graphite electrode market, which is currently experiencing low prices. As a result, an upward trend in graphite electrode prices is likely to become inevitable in the near future.
In summary, From the perspective of the overall domestic economic environment, stability is expected to be maintained. At this stage, the Chinese graphite electrode market has already reached a relatively low level, and graphite electrode companies as a whole are operating at a loss. Graphite electrode enterprises have not been operating at full capacity, and graphite electrode inventories are gradually declining, approaching the point of supply-demand equilibrium. Recently, rising raw material prices have also compelled graphite electrode companies to raise their prices slightly. Therefore, considering the overall market conditions, there are factors suggesting a rebound in the graphite electrode market. It is anticipated that prices will continue to rise in the coming period, with an expected increase ranging from 1,000 to 3,000 yuan per ton.
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