【Graphite Electrodes】Market Review (January-October): Slight Boost Expected in Q4!

The Chinese graphite electrode market has primarily been sluggish in 2024, with prices trending downward. The demand for graphite electrodes has continued to decrease due to the sluggish real estate market, leading to a downturn in the steel industry, which has further strained the already loss-making graphite electrode sector. As a result, the operational viability of graphite electrode enterprises has become increasingly difficult, and losses persist.

Some small and medium-sized graphite electrode companies have not produced this year, relying on existing inventory. Adhering to the principle of "less output, less loss," they have accumulated semi-finished stock. Although graphite electrode companies collectively attempted a price increase in July during the third quarter, actual transaction prices were unsatisfactory, with low-priced resources dominating trades. This is primarily due to oversupply and weak demand, which has dampened business confidence.

By early October, macroeconomic favorable policies continued to stimulate market confidence following the National Day holiday, with significant upward movement in rebar prices. There is a trend of upward price movement in the graphite electrode market, and companies are planning to raise prices.

Price Trend of Graphite Electrodes (as of early October 2024)

From the supply side, as of early October, the operating rate in the graphite electrode industry remains at 30%-45%, lower than last year. Major graphite electrode manufacturers maintain normal production to ensure a balance between production and sales. However, some smaller enterprises lack the willingness to operate, considering market conditions and ongoing losses before deciding on shipments. In the first quarter, production was reduced or halted by some companies due to weather and equipment maintenance, leading to a decline in operating rates. Towards the end of the first quarter, following the Spring Festival holiday and rising temperatures, graphite electrode companies gradually resumed production. Although some companies are still in the preparation stage for resuming operations, the overall operating status is gradually returning to normal.

The second and third quarters saw minor changes in production, primarily impacted by weak market demand and sluggish transaction prices. The long-term loss situation has resulted in low production enthusiasm among graphite electrode manufacturers, with a prevailing sentiment of production control and reductions.

On the demand side, the real estate market’s slump and slowing infrastructure investment growth have led to a decrease in construction steel demand. Rebar prices have remained low, and the electric arc furnace (EAF) steel sector has also experienced losses. Production enthusiasm is low due to decreased profit margins and high raw material costs, which weaken their competitive edge. Long-process steel mills have been procuring medium-sized graphite electrodes based on demand. Contrary to the seasonal trends seen in September and October in previous years, there has been no significant replenishment of inventory by downstream steel mills, which only engaged in periodic restocking without large-scale procurement of graphite electrodes. Additionally, the markets for yellow phosphorus and metallic silicon have also performed poorly throughout the year, leading to insufficient demand.

The prices of low-sulfur calcined coke and needle coke, which are upstream raw materials for graphite electrodes, have decreased compared to the same period last year, while coal tar pitch prices have also declined. This overall reduction in costs does not provide sufficient support for graphite electrode prices. To minimize losses and save costs, graphite electrode companies have adjusted their raw material ratios, leading to variable product quality. Overall, the cost side remains bearish.

Market Outlook

As of October, boosted by macroeconomic policies, graphite electrode companies are seizing the opportunity for price increases, with rises ranging from 300 to 500 RMB/ton. Due to a series of favorable news such as reserve requirement ratio cuts, interest rate reductions, and other policies, the EAF steel market shows signs of returning to profitability. It is expected that downstream steel mills will be somewhat receptive to price increases for graphite electrodes, although actual demand will remain limited, with steel mills primarily engaging in just-in-time procurement. The graphite electrode market is anticipated to stabilize in the fourth quarter, although significant price adjustments will still be challenging. With the upcoming Spring Festival, there may be slight pre-holiday inventory accumulation that could provide minor support for the transaction volume in the graphite electrode market.

(Source: Baiinfo)

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