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Graphite electrode monthly review: Graphite electrode demand was weak in August

Market aspect

Since August, due to the steel market is still in the off-season, coupled with the impact of the policy side of the second half of the production reduction and other factors, the graphite electrode market demand is relatively weak, so manufacturers are mainly wait-and-see. Individual manufacturers experienced low-price selling due to high inventory pressure in the early stage, which drove some traders and small and medium-sized electrode manufacturers to cut prices. Market behaviors fluctuated to a certain extent, and mainstream prices declined slightly.

Affected by the continuous rise in the price of petroleum coke this month, the price of ordinary and high-power graphite electrodes is relatively strong, rising steadily, with an increase of 500-1000 yuan/ton.
In terms of production, except for the several top factories that are still operating at full capacity, other manufacturers are not operating at full capacity and have gradually begun to reduce production. Recently, the cost of baking and graphitization processing has continued to increase, which has further increased the cost of electrodes. Electrode manufacturers are not optimistic about the future market and have to reduce production to reduce risks.

As of August 26, the mainstream price of UHP450mm graphite electrodes with 30% needle coke content on the market was RMB 18,500/ton, down by RMB 1500/ton from the previous month, and the mainstream price of UHP600mm specifications was RMB 22,000/ton. Compared with the previous month, it fell by 2000 yuan/ton, and the price of UHP700mm remained at 280,00-30,000 yuan/ton.

Export side

China exported 32,000 tons of graphite electrodes in July, a year-on-year increase of 61.6%. According to feedback from some export companies, the containers exported to European are particularly tight. Although the domestic electrode export situation in the first half of the year is acceptable, the overall situation has not recovered to the level before the covid-19 pandemic, and there is still a certain degree of uncertainty in the second half of the year.

Raw materials

In August, domestic petroleum coke prices rose sharply again. The low-sulfur calcined coke was quoted at 5800-6000 yuan/ton, an increase of about 800 yuan/ton from the previous month. After the downstream market's inventory was digested, it was more active to purchase, and the petroleum coke plant was actively adjusting the price.
In August, the domestic needle coke quotation was stable, but the downstream electrode customers were not willing to purchase, and the price had a trend of callback. As of August 26, the domestic coal-based and oil-based product market mainstream quotations were 8000-11000 yuan/ton.

Steel plant aspect

In August, domestic steel prices generally showed a trend of decline and then rise, and prices were basically the same as in July. Affected by electricity curtailment in some areas, the output of electric furnace steel has been affected to a certain extent. The overall market transaction situation is average. In July, the average daily output of crude steel, pig iron and steel products in China was 2,799,700 tons, 2,350,000 tons, and 3.5806 million tons, respectively, down 10.53%, 6.97%, and 11.02% from June. As of August 26, 2021, the capacity utilization rate of 92 independent electric furnace steel plants was 69.87%, a decrease of 2.03% from the previous month.

Market forecast

Recently, the price of petroleum coke has rebounded again. Some medium and small electrode manufacturers are not enthusiastic about production, and the utilization rate of production capacity has been lowered. There are still uncertainties in steel mills' production reduction activities in the later period, and the graphite electrode market is still see differences in the short term. However, the room for callbacks is extremely limited.

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