【Graphite Electrodes】 Price War Below Cost Line: How Long Can the Industry Sustain?

Since Q2 2024, the graphite electrode industry has faced unprecedented challenges, with prices falling below most companies' cost lines, plunging the entire sector into a difficult period of loss-making production. What's more concerning for some companies is the cutthroat competition, with some selling below cost, further intensifying market pressures and driving down the industry's average profit margins, leading to widespread significant losses.

According to data, the average cost of UHP600 electrodes is around 17,410 yuan/ton, nearly 2,000 yuan/ton higher than the steel mill purchase price. Faced with this severe situation, how are companies responding?

Company A: We've stopped accepting low-priced orders. Prices for smaller electrodes have stabilized, but we are currently in the steel industry's traditional off-season, with only rigid demand. In July, our operation rate was around 70%, as we had to reduce production and limit orders. We can't afford to lose several thousand yuan per ton.

Company B: We barely broke even in Q1, but since April, demand has sharply declined, and prices have dropped, pushing the industry into losses. We had to slow production and maintain minimal raw material inventory. However, reducing material costs may harm the industry's long-term sustainability.

Company C: Despite the current situation where we lose money on every ton sold, we can't afford to lay off workers due to short-term market fluctuations. Losses have become a reality in the current industry reshuffling.

Company D: The industry has been unprofitable for some time, but leading companies have actively maintained prices. The industry meeting in July signaled the need to eliminate extremely low prices, and in Q3, with the formation of industry consensus and the actions of leading companies, prices are expected to stabilize. We plan to maintain stable production this year, with output consistent with last year.

Company E: The overall slump in the steel industry has increased pressure on graphite electrode prices, which has also affected upstream raw materials like needle coke. While raw material costs have fallen, we are concerned that this could lead to quality and performance issues in graphite electrodes, which may surface during downstream applications, particularly in steel mills.

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