CRU: Graphite Electrode Prices Have Risen Sharply due to Supply Tightness in China

LONDON, August 11, 2017 /PRNewswire/ --

Graphite electrode prices have risen sharply recently, impacting both the steel and aluminium industries. CRU believe that the rise in prices are due to supply side factors, rather than being driven by changes to demand from the Chinese steel industry. If graphite electrode prices increase tenfold y/y, this could add up to $80 /t to the cost of EAF route steel production.

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Prices have increased rapidly this year
Graphite electrode prices and their input materials have risen sharply this year; needle coke prices have reportedly increased to about $3,200t from $450/t a year. CRU believe that the rise in prices are due to supply side factors, rather than being driven by changes to demand from the Chinese steel industry. These changes are affecting the whole supply chain - with raw materials suppliers unable to meet demand from electrode manufacturers, and with steel mills around the world concerned that they will run out of replacement electrodes by the end of the year. We hear that there is currently a year long waiting period for electrodes from manufacturers.

A supply side story
A perfect storm of several supply factors have combined to result in sharp price rises. Global supply of graphite electrodes is more concentrated in China than it was pre-2014, when exports of Chinese billet substantially reduced Asian EAF route steel production, and by consequence also graphite electrode production capacity outside China. This year, there have been several environmental restriction related developments to the graphite electrode sector in China.

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SOURCE CRU