Application and Prospect Analysis of Needle Coke in Graphite Electrode Industry

Electric arc furnace steelmaking development

The steel industry is the main source of carbon emissions in China. There are two main steel production modes: blast furnace and electric arc furnace (EAF). EAF steelmaking can reduce carbon emissions by 60%, realize the recycling of scrap steel resources and reduce dependence on iron ore imports. Downstream UHP graphite electrode is widely used in the production of electric furnace steel. The market demand is increasing. The steel industry has proposed to take the lead in achieving the goals of "Emission peak" and "Carbon neutrality" by 2025. Under China's steel industry policy guidance, a large number of steel plants will use EAFs to replace converter and blast furnace steelmaking. 

In 2020, China's crude steel output was 1054.4Mt, of which the output of electric arc furnace steel was about 96Mt, accounting for only 9.1% of the total crude steel. Compared with the world average of 18%, 67% in the United States, 39% in the European Union and 22% in Japan, there is still much room for improvement. According to the draft Guiding Opinions on Promoting the High-quality Development of Iron and Steel Industry issued by the Ministry of Industry and Information Technology on December 31, 2020, it is proposed that: Strive to increase the proportion of electric arc furnace steel output to the total crude steel output to 15%~20% by 2025. With the increase of EAF steel production, the demand for UHP graphite electrode will increase significantly. The development trend of EAF in China is high-end and large-scale, which puts forward greater demand for large-size and UHP graphite electrode.

Production status of graphite electrode

Graphite electrode is the necessary consumable material in EAF steelmaking. Figure 1 shows the production capacity and output of graphite electrodes in China in the past five years. Graphite electrode production capacity increased from 105,000 tons/year in 2016 to 220,000 tons/year in 2020, with a CAGR of 15.94%. These five years is the period of rapid growth of graphite electrode production capacity, but also the rapid development of graphite electrode industry operating cycle. Before 2017, the graphite electrode industry was a traditional manufacturing industry with high energy consumption and high pollution. China's large graphite electrode enterprises production reduction, small and medium-sized graphite electrode enterprises face bankruptcy, and even international electrode giants have to stop production, resell, quit. In 2017, influenced and promoted by China's forced elimination of "Ground rod steel"  policy, China's graphite electrode price rose sharply. Stimulated by excess profits, graphite electrode market ushered in a wave of capacity recovery and expansion.

In 2019, China's graphite electrode output reached a new high in recent years, reaching 1189kt. Affected by the epidemic, the demand weakened, and graphite electrode output decreased to 1020kt in 2020. However, in general, China's graphite electrode industry has a serious overcapacity, with the utilization rate falling from 70% in 2017 to 46% in 2020, a record low.

Demand analysis of needle coke in graphite electrode industry

The development of EAF steel will increase the demand for UHP graphite electrode. In 2025, the demand for graphite electrode and raw material needle coke is expected to be about 1300kt and 450kt respectively. Since petroleum-based needle coke is superior to coal-based needle coke in the production of large UHP graphite electrodes and nipples, the demand for petroleum-based needle coke in graphite electrode industry will further increase and occupy the market space of coal-based needle coke. For more information about the supply and demand analysis of needle coke market, welcome to contact us.