【Graphite Electrode】Cost Pressure Leads to Price Increase

In October, the overall trend in the graphite electrode market remained stable with slight upward movements. Faced with cost pressures on production and operations, some graphite electrode manufacturers have slightly raised their market quotations. As of October 27th, the average monthly prices for ultra-high power 600mm electrodes were 21,500 RMB/ton, high-power 500mm electrodes were 16,500 RMB/ton, and regular power 500mm electrodes were 15,500 RMB/ton. Due to the meager or even non-existent profit margins in graphite electrode production, there are few companies engaged in normal production. Only a few mainstream companies are maintaining low-load production to meet the demands of downstream customers. According to surveys, most companies believe that the current supply and demand situation will not undergo significant fluctuations, and it will take some time for the market to fully recover. 

This week, the average capacity utilization rate of independent electric arc furnace (EAF) steel mills reached 71.53%, an increase of 0.93 percentage points compared to the previous period and an increase of 11.07 percentage points year-on-year. This is due to the recent macroeconomic stimuli, which have led to a clear increase in finished product prices. Steel mills' profit margins have improved somewhat, prompting some mills to increase their operating hours and production efficiency. This has had a certain stimulating effect on the graphite electrode market. However, it should be noted that this is only a temporary increase in production by some mills, and further recovery in the market will depend on the future demand for graphite electrodes from steel mills.

In September 2023, China's total graphite exports reached 24,800 tons, a slight increase over the previous period.It is expected that graphite electrode exports in October will remain at a stable and gradually increasing level, but there will be no significant surge. Following the recent lifting of export controls on graphite electrodes, there is a positive outlook for graphite electrode exports. It is expected that more companies will enter the export market. However, this will also intensify competition in the graphite electrode market. In the long term, as China's graphite electrode technology and product quality continue to improve, graphite electrode exports are likely to further increase.

In summary, in the short term, the graphite electrode market will continue to face challenges of low profitability and limited operating rates. Looking ahead, the favorable macroeconomic factors support the steel market, and electric arc furnace steelmaking is expected to be a significant trend in the future. As graphite electrodes are essential consumables for electric arc furnace steel production, their demand is likely to continue growing. Contact us to learn about real-time updates in the graphite electrode industry.