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A brief analysis of the recent UHP graphite electrode market

After two years of brilliant achievements in the graphite electrode industry, graphite electrodes entered a trough in 2019. Today's UHP graphite electrode market is not only difficult, but also miserable. Low-price competition, production suspension and production restrictions, and cost losses have almost brought the industry down.

Supply side

1. Environmental protection investment

In recent years, China’s environmental protection efforts have continued to increase, and electrode companies’ investment in environmental protection costs has become a rigid upward trend. In order to meet stringent pollution emission standards and supervision and management requirements, companies have focused on air, water, solid waste pollution control and ecological construction and The investment in strengthening infrastructure construction and operation and maintenance in protection and other aspects is increasing, including the investment in equipment and production technology upgrades, and the resulting environmental monitoring facility expenditures, environmental protection agency management expenditures, environmental protection taxes and fees, etc. are on the increase, the expenditure of some production enterprises ranges from tens of millions or more.

2. Production investment

Driven by the high profits of graphite electrodes, companies have increased investment in capacity expansion and process improvement, imported large presses, increased technology research and development, increased labor costs, etc., and the cost of electrodes has shown a high level increase.

Demand side

Looking at the bidding situation of steel mills from January to July 2020, small and medium-sized electrodes in the ultra-high electrode market show signs of recovery, but the range is limited, and the price of large-size ultra-high electrodes continues to fall. Judging from recent market inquiries, the stocks of ultra-high, medium and small-sized electrodes are now tight, and they are indeed priceless. Most steel mills are attracting price rebounds, and the phenomenon of bargaining among manufacturers has slightly changed.

In terms of exports, due to the impact of the epidemic, the export of electrodes has been greatly affected. Currently, exports are mainly from Russia and CIS countries, and exports from the Middle East and European and American markets have a greater impact. It is reported that Russia imported 34,000 tons of graphite electrodes in May, the import volume decreased by 50% compared with April, and the import volume from January to May increased by 18% compared with the same period last year. Exports are transferred to the domestic market, and the oversupply electrode market is hitting hard.

Market prediction

In the case of weak demand, the price has become the most direct manifestation of the market. Since February, the price of ultra-high electrodes has fallen all the way to the cost line, or even below the cost line... According to industry insiders, according to the current market transaction price , The loss of small and medium-sized electrodes is 2000-3000 yuan/ton, and the loss of large-sized electrodes is above 4000 yuan/ton. The ultra-high electrode market has experienced a surge in 2017-2018, and has experienced a sharp decline in 2019-2020. The industry that has risen and fallen greatly has greatly damaged an industry, and the quality of products are even more uneven.

Inventory of small and medium-sized ultra-high electrodes bottomed out at a low level, and large-sized electrodes continued to fall. In the adjustment of the balance of supply and demand, there will be no continuous huge profits or continuous losses, and the price will eventually return to a reasonable level. It is expected that the price difference of 350-600 ultra-high electrodes will gradually narrow in the later period. Although it will be in a bear market adjustment state for a certain period of time, there may be a long-term adjustment. However, under the influence of the national electric furnace steelmaking policy, the electrode market The demand is still there, but it will return to a normal level of profitability. In a state of heavy losses, perhaps a wave of companies will permanently withdraw from the market. It is expected that small and medium-sized electrodes will rebound significantly in the short term, or continue to increase slightly. Due to strong supply and weak demand, large-sized electrodes may continue to decrease slightly. However, considering the cost and downstream demand, it may be difficult to make large adjustments, which is subject to market investigation.

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