Graphite electrode price rose slightly, enterprise continued to suffer losses

Since July, graphite electrode market has been in a state of weak supply and demand. Enterprises are faced with the phenomenon of high production costs, low finished product prices and upside down production profits. Most graphite electrode plants have turned to other processes, and only a few old enterprises are struggling to operate. Although the price of graphite electrode has been pushed up by 500-1000 yuan/ton at the end of October, the enterprise still cannot get rid of the loss situation.

From January to June 2022, graphite electrode price showed a slight upward trend, but after July, the price fell all the way, and the market quotation rose by 500-1000 yuan/ton until the end of October. By the beginning of November, the price range of ultra-high power 600MM was 24,500-25,000 yuan/ton, the price range of ultra-high power 700MM was 29,500-30,500 yuan/ton, the price range of high power 500MM was 21,000-22,500 yuan/ton, and the price range of regular power 500MM was 18,500-20,000 yuan/ton. Market prices are mainly driven up by the recovery of downstream steel plants, and the demand for graphite electrode external purchasing picked up slightly.

As of the week ended October 28, the average operating rate of domestic electric arc furnace steelmaking was 60.46%, up 2.51% month-on-month and down 8.78% year-on-year. Capacity utilization and operating rate continued to grow slightly. From the production situation, current profits of steel plant are fairly good. Due to the early production reduction and the improvement of downstream demand, current factory inventory is low. Most factories have increased production time and productivity to improve output. Therefore, the capacity utilization and operating rate are increasing. The production of graphite electrode is in low load operation. Once the downstream external purchasing demand improves, it will form a positive support for graphite electrode price.

From January to September 2022, the operating rate of graphite electrode in China averaged 45%, a year-on-year decrease of 16 percentage points. Since July, the operating rate of graphite electrode has dropped significantly. By the end of October, the operating rate of graphite electrode was nearly 23%. Most small enterprises switch to crucible production or graphitization processing of negative electrodes, and only the old enterprises such as Fangda, Pingmei, Jilin Carbon, and 83 Graphite insist on production, mainly to ensure the source of raw materials for fixed cooperation customers.

Since July, the gross profit of graphite electrode production has been in the upside down, ranging from -1000 to -2000 yuan/ton. Even if the price has risen by 1000 yuan/ton, the current deficit production cannot be reversed. Therefore, the enterprise's enthusiasm for production is still very low.

In the short term, the terminal steel plant production or maintains the current small fluctuation level, graphite electrode inventory gradually decreases, and the mentality of holding the price still exists. The price of graphite electrode is still slightly pushed up. However, the downturn in the steel industry is difficult to change in the short term, and the downstream demand for graphite electrodes has not improved significantly. The weak supply and demand situation may last until the end of the year. Reading the latest reports of  GE industry, feel free to contact us.