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Graphite Electrode Weekly Review in Mid October 2021

Graphite Electrode Weekly Review: The scope of power rationing after Chinese National holiday has expanded, and the price of electrodes continue to rise. 

After the National Day holiday, the domestic graphite electrode market prices have been adjusted overall. During the holidaythe ex-works price of petroleum coke continued to be adjusted, and the domestic graphite electrode quotation showed an upward trend, with an average increase of 1,000-1,500 yuan/ton compared to previous stage.

Since September, many areas in China have begun to control energy consumption. This week, Shanxi, Henan, and Hebei also began to ration power. At present, the cost of raw materials and graphitization of electrodes has continued to rise, coupled with the recent short supply of electricity, will result in a significant reduction in resource allocation in the later period. The bullish sentiment of electrodes in the market is high. However, the resumption of electric furnace steel production in some areas after the holiday has improved. The operating rate of electric furnace steel increased from 46.55% to 56.07%. According to some steel mills, the current stocks of electrodes vary from one month to three months.

During the festival, heavy rainfall in Shanxi and other places caused transportation interruption in many places. The production of related graphite electrode enterprises has not been affected for the time being, but the power rationing started this week, which will make the power shortage of graphite electrode graphitization process. Under the dual control of energy consumption in September, 18 key graphite electrode manufacturers across China produced 47,800 tons of graphite electrodes, a decrease of 11.8% month-on-month and a year-on-year decrease of 18.8%. This situation will continue in October.

As of October 14th, the mainstream price of  UHP450mm with 30% needle coke content on the market is 19,000-19,500 yuan/ton, an increase of 1,500 yuan/ton from before the holiday. The mainstream price of UHP600mm is 22,000-25,000 yuan/ton, UHP700mm price is 28,500-30,000 yuan/ton, a slight increase as well.

Raw materials

Petroleum coke prices continued to increase during the National Day. As of this Thursday, Fushun Petrochemical 1#A Petroleum Coke was quoted at RMB 4,800/ton, an increase of RMB 400/ton from the previous period. Low-sulfur calcined coke saw a supplementary increase, with quotations ranging from 7000-7200 yuan/ton, an increase of 200-300 yuan/ton from the former stage. Domestic needle coke prices have also risen after the holiday. As of the end of this month, domestic coal-based and oil-based product market mainstream prices are 9500-11,000 yuan/ton, and low-end quotations have been raised by about 1,500 yuan/ton

Steel plant aspect

After the holiday, the domestic steel market showed a fluctuating trend, and the price was basically the same as at the end of September. During the National Day, some electric furnace steel plants in Jiangsu took the lead in resuming production, shifting from production suspension to staggered production, and the capacity utilization rate of electric furnace steel in East China rebounded significantly.While in other regions, there was a slight decline, and many steel mills were affected by the reduction in scrap supply during the National Day period. As of October 14, the average production cost of third-grade rebar in domestic electric furnace steel plants was 5143 yuan/ton, an increase of 109 yuan/ton from before the holiday, and the average profit increased by 129 yuan/ton. The capacity utilization rate of 92 independent electric furnace steel plants nationwide was 56.07%, an increase of 9.52% compared to before.

Market forecast

The increase in the scope of the national power rationing has brought great uncertainty to the later market resource supply of graphite electrodes. Electrode manufacturers are worried that the power ration will significantly reduce the graphitization capacity. Coupled with the increase in processing costs, the willingness of price increasing is strong. The price of petroleum coke has remained high recently, and it is expected that the price of graphite electrodes will continue to rise.

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