【UHP Graphite Electrode】November China Local Prices Expected to Stabilize with Weak Tendencies

In October, the domestic UHP (ultra-high power) graphite electrode prices showed a trend of initial strength followed by a decline, with some specifications experiencing a month-on-month decrease of 200-400 yuan/ton. The increased market competition and clear cost reduction targets in the steel industry led to intense competition among graphite electrode manufacturers, resulting in a lack of price support. 

1. Review – Price Decline:

In October, domestic UHP graphite electrode prices showed a trend of falling after an initial rise. Fierce competition among graphite electrode manufacturers, coupled with the steel industry's clear cost reduction goals, led to low-price bidding for graphite electrodes, weakening price support.

Taking the example of φ500 UHP graphite electrodes in Jiangsu, the current quoted price is 16,900 yuan/ton, a month-on-month decrease of 400 yuan/ton.

2. Cost – Weak Raw Material Prices:

In October, the prices of needle coke in China were unusually low, with a 700 yuan/ton decrease in the price of Yida needle coke in Shandong, while the price of calcined coke remained stable. The demand for raw materials for graphite electrodes weakened, with downstream purchasers focusing on low-price procurement.

In terms of costs, according to Mysteel data, based on the market price of 16,900 yuan/ton for φ500 UHP graphite electrodes, the profit is 687 yuan/ton. However, considering market transaction prices, the profit is only around 200 yuan/ton.

3. Demand – Steel Price Loss Difficult to Change, Production Restrictions Imminent:

In October, the comprehensive price index for construction materials decreased by 1.89 points month-on-month, with a decline in steel prices. The degree of loss in blast furnaces increased, while electric furnace profits improved significantly in the past two months. The operating rates of blast furnaces and electric furnaces increased slightly month-on-month in October. However, due to cost reduction measures by steel mills, some refining time was reduced. Additionally, electric furnaces face seasonal shutdowns in the later period, leading to a declining demand for graphite electrodes.

4. November Market Outlook – Weakening Demand, Increased Competitive Pressure:

(1) On the demand side, entering November, electric furnaces are about to enter the seasonal shutdown season, and the autumn-winter heating season is approaching. Steel mills may face certain levels of production restrictions or shutdowns, weakening the purchasing power for UHP graphite electrodes.

(2) On the supply side, graphite electrode production is concentrated in large factories. After entering the fourth quarter, some small and medium-sized enterprises have increased production, competing for market share and leading to fierce market competition. Downstream purchasers are securing contracts at low prices, making it challenging to sustain prices.

(3) In terms of costs, the outlook for needle coke, petroleum coke, and coal tar pitch prices is pessimistic, potentially leading to a weakening trend in the cost of UHP graphite electrodes.

In summary, with strong supply and weak demand, decreasing costs, it is expected that the domestic UHP graphite electrode market will stabilize with a tendency towards weakness in November. Feel free to contact us for more information about the graphite electrode industry.