Category: Graphite Electrode & Needle Coke

Where are Indian Graphite Electrodes Prices Heading?

SteelMint had reported in Mar’19 that the graphite electrodes prices in India registered a fall of INR 50,000 (USD 721/MT) against its prices in Jan and Feb’19 and now if reliable sources are to be believed, it seems that Indian Graphite Electrode manufacturers have further lowered the grade electrode prices by INR 50,000/MT for the April month.

Subsequently, the price of UHP grade Graphite Electrodes of size 600mm is likely to be around INR 800,000/MT (USD 11,540/MT) and that of lower grade electrodes (HP grade) of size 400-450mm the same is estimated to be around INR 450,000/MT (USD 6,500/MT). Last month the plunge in lower grade electrode price was higher (almost by USD 2,000/MT) compared to higher grade ones. However, this month the fall in case of both the grades GE is same.

Amid the rapid increase in GE demand and prices in the latter half of 2017, the Indian manufacturers entered into quarterly contracts with the GE consumers. However, the market dynamics changed towards the end of 2018 which led to fall in Chinese GE prices, indirectly impacting Indian graphite electrode market. Market participants have informed us that in the given market situation, instead of entering into the quarterly contracts like before, GE buyers have started negotiating for prices contracts on monthly basis and this is why prices have changed over past two months.

However, no one has confirmed that if this trend of monthly negotiations will continue in the future also. With GE exports not being made to Iran due to sanctions there is ample availability of graphite electrodes in the Indian market and buyers are maintaining inventory of just 10-12 days which was earlier kept for 30 to 40 days.

Why the Plunge in Indian Graphite Electrode Prices?

The fall in Indian Graphite Electrode prices can be attributed to the ongoing downtrend in Chinese Graphite Electrode prices since the start of the winter heating season from mid-November 2018. During this season (Nov-Mar), steel demand in China takes a beating and the country imposes production cuts in the steel sector that indirectly affect Graphite Electrode demand (which is a key raw material in steel production via the electric furnace route).

China is a major Graphite Electrode producing and exporting country and its price trends usually affect global Graphite Electrode prices. Thus, Indian producers need to take into account the prices in the Chinese market while finalizing their quarterly contracts.

Another key factor that poses a threat to Indian Graphite Electrode manufacturers is the removal of the anti-dumping duty on Graphite Electrode imports from China announced in August last year. This elimination of trade restrictions on Indian imports of Chinese Graphite Electrodes has increased the risk of Chinese electrodes freely entering the Indian market.

In fact, Indian EAF steel producers are anticipating further fall in Graphite Electrode prices, as according to them importing China’s UHP grade Graphite Electrodes will be cheaper compared to Indian electrodes. The price of China’s 600mm UHP grade Graphite Electrode is currently RMB 65,000/MT (USD 9,700/MT) and importing the same to India, even including customs duty, still makes it cheaper by USD 800-1,000/MT against India’s domestic Graphite Electrode price.

Lower Grade Graphite Electrode Prices under more Pressure

According to market sources, Indian Graphite Electrode manufacturers are facing tough competition from Chinese imports of lower grade HP (High Power) and RP (Regular Power) Graphite Electrodes.

This is because the production of lower grade electrodes in China is increasing and amid sufficient availability, prices too are falling. In a period of just four months from Nov’18 to Mar’19, China’s HP grade Graphite Electrode price of size 450mm has plunged by 60% and is currently trending at RMB 27,000 (USD 4,023/MT).

“With the removal of the anti-dumping duty, importing Chinese Graphite Electrode has become quite feasible and given the current HP grade electrodes price in China, importing the same even after including all the duties is still proving to be cheaper for us compared to buying Indian products. Thus, Indian Graphite Electrode producers have no option but to revise their prices,” said a GE buyer from India.

Indian Producers at the Receiving End

According to customs data, India imported about 1,030 tonnes of electrodes in January this year against just 395 tonnes in Jan’18 registering a y-o-y growth of more than 150%. Out of this 1,030 tonnes imported, about 98% imports came from China. In December 2018, India had imported 1,404 tonnes of electrodes with only 30% being contributed from China.

In 2018, India imported 7,242 tonne of Graphite Electrodes out of which imports from China was 55% at 4,018 tonne. In 2017, India’s total Graphite Electrode imports stood at 3,871 tonne and China’s contribution to total imports was only about 14%. This clearly shows the impact of the lifting of the anti-dumping duty on Chinese imports.

In case of other countries such as Japan and the US, Graphite Electrode contracts are usually locked for six months and prices have been fixed at USD 14,000 per tonne till June 2019.

Amid falling Graphite Electrode prices, Indian manufacturers are troubled by rising needle coke costs, the contract for which has been fixed at USD 4,200-4,500/MT, an increase of USD 1,000 per tonne. This indicates that Indian manufacturers’ margins may suffer in the upcoming quarter.

To know more about how the Graphite Electrode market will pan out in the days to come, book your seat at the ‘2nd Global Graphite Electrodes Conference, Bangkok’, from 27 to 29 August 2019.

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April 1, 2019
Will China’s Needle Coke Shortage Derail Their Graphite Electrodes Production Plans?

In late 2017, a crisis-like situation engulfed the steelmakers around the world that make steel through the Electric Arc Furnace (EAF) route due to shortage of graphite electrodes amid reforms in China’s steel sector, which further led to dramatic increase in the global electrode prices.

How did the graphite electrodes crisis start?

The Chinese government in 2017 decided to shut down on some of the illegal and highly polluting Industries emanating from serious environmental concerns and reports suggest that about 140 MnT of steel capacities, primarily Induction Arc Furnaces, Mini Blast Furnaces and some very old blast furnaces had been shut down in past two years. These closures led to a sudden and significant drop of export of finished steel from China to the rest of the world. All of this, helped the other countries of the world to increase their own production of steel which led to a sudden increase in the demand of graphite electrodes outside of China.

In addition to a shortage in Electrodes, the demand for its key raw material – needle coke which is already short in supply also increased significantly. Along with this, the growing importance of electric vehicles (EV) in China has also led to the surge in demand of needle coke from EV segment.

Needle coke availability – A major concern

China’s closure of inefficient induction furnaces and polluting blast furnaces are expected to be replaced by electric arc furnace. New policy measures announced in China ensures zero growth in steel capacity by requiring steel capacity replacement to be kept in ratio – 1.25:1 or 1:1 (regional differentiation).

Apart from this it is noteworthy that while the rest of the world produces approximately 45% of the total steel through Electric Arc Furnace route, China till recently has been producing just about 7-8%. The country has just about started to catch up with the rest of the world in this environmental -friendly way of producing steel. China has announced its intentions to produce about 20% of its steel through Electric Arc Furnace by 2020 which means that their Graphite Electrode and needle coke requirements could go up by as much as 3x over the next three to four years.

However, one of the major areas of concern here is that China is adding EAFs more quickly than coke or electrode capacity and is also making substantial investments into their EV industry.

China has substantial capacity in ladle electrodes but limited capacity for UHP (ultra-high power) electrodes that are consumed in the West. China utilizes lower quality electrodes sourced with pitch coke and can tolerate the lower quality given the primary product made is commodity grade rebar.

Fangda Carbon is the only producer of UHPs in China and they are importing high quality coke from South Korea to supplement their production process. China has limited capacity of petroleum needle coke (used for UHP grade GE) and their domestic sources of premium coal based pitch coke for the manufacturing of high grade electrodes have been eroded from the blast furnace capacity rationalization over the past several years.

China has plans to add more needle coke capacity but the majority of these plants are for pitch coke and face significant challenges of sourcing high quality coal tar pitch and producing at consistent quality levels.

China’s dependency on imports to meet its needle coke requirements set to stay

As Chinese coke is generally pitch coke (from coal tar) or some anode grade Calcined material that is being utilized in ladle electrode production, its availability is quite an issue.

This is because pitch coke requires meaningfully longer bake and graphitizing time, which reduces effective capacity and also is a lower efficiency electrode. Lithium ion battery producers use a mix of petroleum needle coke, owing to its high density and therefore longer driving ranges and battery life span.

Thus, in order to meet its needle coke requirement for UHP grade electrodes, China has to depend upon imports.

A look at the Numbers

According to China’s customs data, the country imported about 137,000 tonnes of petroleum-based needle coke in 2018, against 95,000 tonnes in previous year. Out of the total imports about 93,000 tonnes was imported from UK and about 9,207 tonnes from Japan. In case of coal-tar pitch needle coke, China imported about 95,000 tonnes in 2018 with highest volume of 65,000 tonnes coming from South Korea and 30,000 tonnes from Japan.

Although China has plans to add more needle coke capacity in the coming years ahead, the plans for pitch coke plants face significant challenges of sourcing high quality coal tar pitch and producing at consistent quality levels and thus has to continue its dependency upon imports in order to meet its electrodes requirements for the new upcoming EAF capacities.

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March 18, 2019

Category: Graphite Electrode & Needle Coke

Where are Indian Graphite Electrodes Prices Heading?

Why the Plunge in Indian Graphite Electrode Prices?

Lower Grade Graphite Electrode Prices under more Pressure

Indian Producers at the Receiving End

Will China’s Needle Coke Shortage Derail Their Graphite Electrodes Production Plans?