2021 Domestic graphite electrode market review

1.PRICE TREND ANALYSIS

In the first quarter of 2021, the price trend of graphite electrode in China was strong, mainly benefited from the high price of raw materials, promoted the continuous rise of graphite electrode price, increased enterprises production pressure, strong market willingness to support price, tight supply of small and medium-sized resources, all of which were good for the overall upward trend of graphite electrode prices.

In the second quarter of 2021, China's graphite electrode market held steady after rising rapidly. The rapid rise was mainly reflected in April, when the steel plant began a new round of bidding. The downstream electric furnace steel plant had high profit and high operation, which was good for graphite electrode demand. On the other hand, Inner Mongolia energy consumption wais under double control, the supply of graphitization was tight, and the supply of graphite electrode was reduced, which increased the driving force for graphite electrode price rise. However, from May to June, the price of raw petroleum coke was bearish, superimposed with downstream repression, graphite electrode price rise was weak.

In the third quarter, the price of graphite electrode in China was stable and weak. The traditional off-season demand, coupled with the strong supply side, the mismatch between supply and demand led to the downward price of graphite electrode. In terms of raw materials, the price continued to rise. Under the pressure of cost, the price of graphite electrode was strong. However, some graphite electrode enterprises quickly cleared the warehouse and recovered funds, resulting in the decline of graphite electrode price at the beginning and end of the third quarter.

In the fourth quarter, due to the impact of domestic production and power restrictions, the price of raw materials in China continued to rise. The price of low sulfur petroleum coke and asphalt increased significantly, and the price of electricity was high. The graphitization supply in Inner Mongolia and other places was tight and the price was high. The cost promoted the price rise of graphite electrode in China. However, limited production and electricity had affected graphite electrode enterprises, but the low start-up and low profit of downstream electric furnace steel also caused the decline of market demand, the weakness of supply and demand, and the reversal of price. There was no demand, only cost driven, and the price rise lacked stable support, so the short-term price correction had also become an occasional normal phenomenon.

In general, the overall shock of China's graphite electrode Market in 2021 is strong. On the one hand, the price of raw materials drives graphite electrode cost rise and fall; on the other hand, the start-up and profit of electric furnace steel plants also effectively drives graphite electrode cost rise and fall. The rise and fall of the graphite electrode market in 2021, regardless of the supply side, deduces the price fluctuation of graphite electrode throughout the year with raw material costs and downstream demand as the leading role.

2. COST AND PROFIT ANALYSIS

From the cost analysis of UHP (ultra-high power) graphite electrode, taking Jiangsu UHP graphite electrode φ 500 as an example, the profit in May of the second quarter reached the highest 5,229 yuan/ton and the lowest - 1,008 yuan/ton in September of the third quarter. From the perspective of the whole market in 2021, the annual profit of UHP graphite electrode maintained positive development for most of the period. Compared with 2018-2020, China's graphite electrode industry basically entered into a stage of sound development. 

From the financial report of Fangda carbon in the first three quarters of 2021, the profit growth rate was 71.91% in the first quarter, 205.38% in the second quarter and 83.85% in the third quarter. The second quarter of 2021 was also a period of rapid profit growth.

3. DEMAND ANALYSIS

(1) Foreign aspect

In 2021, the total export volume of China's graphite electrode was expected to reach 400,000 tons, with a year-on-year increase of 19.55%, surpassing the level in 2020. From the export data from January to November, the export volume had reached 391200 tons. In 2021, due to the stabilizing factors of domestic epidemic situation, all work was carried out in a more organized manner and the volume of export volume was increased.

In 2021, the overall trend of China's graphite electrode export was strong. From the perspective of the global economic market recovered after the epidemic, there was a strong contrast between the markets in 2021 and 2019. In 2019, China's graphite electrode export was mainly concentrated between March and September. The graphite electrode export volume increased month by month from March to July. The export volume from March to September accounted for 66.84% of the total export volume of the whole year, while in 2021, From April to October, the export volume was stable and weak. In addition to the rapid growth in March and November, on the whole, the export volume in each quarter was roughly the same.

(2) Domestic demand

Relevant institutions released: in 2021, China's crude steel output was 1.040 billion tons, down 2.3% year on year, China's graphite electrode demand was 607,400 tons, and in 2021 China's graphite electrode output was estimated to exceed 1.2 million tons. 

From the current domestic and international demand, China's graphite electrode is in a state of overcapacity, also indirectly caused the current domestic graphite electrode price is difficult to return to the high profit era, reading the overall graphite electrode news contact us.