What Happened in China’s Graphite Electrodes Market this Week?

The Chinese graphite electrodes prices especially that of UHP grade continues to remain stable this week. The current prices in China of UHP grade GE of size 450mm are heard to be in the range of RMB 24,000 – 26,000/MT (USD 3,470 – 3,760/MT) whereas that of size 600mm are in the range of RMB 48,000 – 60,000/MT (USD 6,940 – 8,675/MT).

The price of HP grade electrodes of 450mm is in the range of RMB 21,000 – 22,000/MT (USD 3,040 – 3,760/MT), according to China-based CBC data.

As per the market sources, the pace of fall in the electrodes prices have slowed down a bit over past one month and prices are stabilising a bit. The market sentiments at present are neither negative not very positive quoted one of the traders based in China. The graphite electrode companies are fiercely bidding, and many manufacturers are looking for opportunities to export to foreign markets. It is being anticipated that the market price will decline slightly in the short term.

Companies that announced their plans for GE facilities

According to the latest reports, Geosource (Shanxi) New Materials Technology Co. Ltd which was incorporated in Taigu Economic and Technological Development Zone has signed an agreement with Shanxi based Tiagu Mingxing Masteel Carbon Co. Ltd to build a new UHP grade GE plant with an annual output of 40,000 tonnes. The total investment of the project is RMB 1.05 billion (USD 151.9 million).

Another company called Chengdu Rongguang Carbon Co Ltd is scheduled to start the production of its new GE project in Sichuan province in July month this year. The construction of the project was started in November last year and the capacity of the project is about 50,000 tonnes.

Why China is adding upon its GE capacities?

Currently, the company’s existing plant is running at a capacity of 1,500 tonnes of electrodes per month and has a production capacity of 20,000 tonnes. In the first half of 2019, the company produced 8,000 tonnes of GE, down by 10% y-o-y basis and their exports volume were about 40% of the total output.

As per the market sources, Chinese companies are adding up on their electrodes capacity amid the situation of a supply glut and falling prices because they believe that the GE demand will increase in the long term given the fact that country is pushing for EAF capacity increase which is a cleaner process of steel production.

Apart from this, last year’s lucrative profits in the electrodes sector in China have encouraged many people to invest in the GE plants and once the plan has been made, it is difficult to completely put a brake on the same, though some try to prolong their construction schedule. Another reason though not very common is that few companies eyes upon land acquisition in the name of high tech projects but later on change their project once the approval is received.