Fastmarkets assessed the fortnightly price for graphite electrodes, HP, fob China at $2,300-2,400 per tonne on July 5, down $100 from $2,400-2,500 per tonne on June 21.
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Fastmarkets&#; fortnightly assessment of graphite electrodes, UHP, fob China was at $2,485-3,100 per tonne on July 5, widening downward by $265 from $2,750-3,100 per tonne previously, with liquidity reported at the low end for UHP 500 mm.
Market participants unanimously agreed that slow demand is pressuring the electrodes market, both domestically and abroad. The UHP spread on Fastmarkets assessment widened to $615 per tonne on July 5 from $350 per tonne on June 21.
A deal was reported at $2,485 per tonne for UHP 550 mm, while offer prices were as high as $3,600-4,000 per tonne.
The wide gap could be attributed to the fact that producers&#; costs in China vary depending on whether they use imported or locally produced material, according to sources.
&#;Even for the same supplier, the price could be different based on the raw materials used. Some tend to use domestic calcined needle coke, while others use imported coke, subject to the demand from their clients in different regions around the world,&#; a producer source in China told Fastmarkets.
Producers that use domestic feedstock were able to lower their offer prices in response to weak demand, while the relatively high costs of imported feedstock have narrowed margins for producers that use that material, sources said.
Prices for imported calcined needle coke were around $950-1,700 per tonne on June 29, while domestic prices stood at around 6,500-9,500 yuan ($899-1,315) per tonne on the same day.
&#;You can produce up to UHP 600 mm electrodes with the good quality domestic pet coke,&#; a trader in Europe said. &#;But electrodes prices are so low now that some producers are out of the market.&#;
&#;It is very hard for producers using imported needle coke under the present circumstances of sustained demand weakness. We don&#;t expect inquiries for material to pick up in Europe until September,&#; a second trader in Europe said.
The widening spread for UHP could also result from some cashflow factors with some trying to cash out while the market is under pressure. But this cases could be rare given that major producers are quoting prices based on the supply-demand fundamentals, a second producer in China said.
Demand for electrodes in China has been muted by weak consumption rates from the downstream steel sector.
&#;Electric arc furnaces are experiencing very limited marginal profits these days. Additionally, demand for steel remains weak. Steelmakers tend to keep inventory low during the slow summer season,&#; a source from one steelmaker in China told Fastmarkets.
&#;Steel prices may be a little higher now in China, but production remains very low,&#; the first trader in Europe said.
&#;The market is saturated in China, so graphite electrodes prices are falling. A recovery in the export market and a boost to add stimulus is needed,&#; a third trader in Europe said.
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Get an in-depth, 10-year view into where and when graphite supply will come online with our graphite long-term forecast.
Graphite Electrodes Market Overview
The global graphite electrodes market size is forecast to reach US$6.2 billion by after growing at a CAGR of 6.4% during the forecast period -. The high demand for graphite electrodes in electric arc furnaces is anticipated to drive the growth of the market during the forecasting period. Electric arc furnaces use graphite electrodes in large quantities for manufacturing steel and non ferrous metals, and other smelting processes. Ultra high-power graphite electrode is expected to contribute extensively to the market&#;s growth owing to their higher thermal resistance and high durability qualities. The growing demand for lithium ion batteries in the automotive sector, especially in the electric vehicle segment is poised to expand the graphite electrodes market globally. Needle coke is used broadly in lithium ion batteries as raw material. The coming years have good scope for the holistic development of the target market. However, government regulations related to industrial pollution might hinder the growth of the graphite electrodes market during the forecast period.
COVID-19 Impact
The graphite electrodes market got severely hit by the COVID-19 pandemic as there was a significant decline in the manufacturing of steel, especially in the first half of . Steel production dropped sharply in many regions during the first half of . According to the Steel Market Developments Q4 report by Organisation for Economic Co-operation and Development (OECD), regions like Europe (-17.9%), North America (-17.6%), South America (-19.9%), and Africa (-20.9%) were the worst hit in terms of steel production. On the contrary, there were regions like the Middle East (-0.5%) and Asia (-2.3%) where steel production was more resilient. Similarly, due to COVID-19, the global steel consumption witnessed a sharp decline of 2.4% in the first three months of compared to the drop in the same period one year earlier.
Graphite Electrodes
MarketReport Coverage
The report: &#;Graphite Electrodes Market Forecast ( -)&#;, by IndustryARC, covers an in-depth analysis of the following segments of the Graphite Electrodes Industry.
By Type: Regular Power (RP), High Power (HP), Super
High Power (SHP), Ultra High Power (UHP), High Density (HD), Others.
By Raw Material: Petroleum Coke, Needle Coke, Pitch Coke, Coal
Tar Pitch, Others.
By Application: Steel Manufacturing, Silicon Metal
Manufacturing, Steel Refining, Smelting Processes, Ferroalloy Production, Non Ferrous Metals
Production, Lithium Ion
Batteries Production, Others.
By End Use Industry: Automotive,
Appliances, Construction, Machinery, Transportation, Aerospace and Defence, Oil
and Refinery, Others.
By Geography: North America (USA, Canada, Mexico), Europe (UK, Germany, France, Italy,
Netherlands, Spain, Russia, Belgium, Rest of Europe), Asia Pacific (China,
Japan, India, South Korea, Australia, and New Zealand, Indonesia, Taiwan,
Malaysia, Rest of Asia Pacific), South America (Brazil, Argentina,
Colombia and Rest of South America), and RoW (Middle East and Africa).
Key Takeaways:
Ultra high power graphite electrode is projected to boost the graphite electrodes market owing to its properties like high heat resistance, crack resistance, durability, etc.
Steel manufacturing globally is anticipated to contribute immensely to the growth of the graphite electrodes market in the forecast period. According to World Steel Association Stainless Steel Figures report, million tonnes of crude steel were produced in globally amid the pandemic, and this number is bigger than the crude steel production that accounted for million tonnes.
Asia Pacific region is anticipated to drive the growth of the target market owing to the huge demand for production and consumption of high quality steel. According to World Steel Association Stainless Steel Figures report, China, India, and Japan were the top three major steel producing countries in with a crude steel production figure of .8 million tonnes, 100.3 million tonnes, and 83.2 million tonnes respectively.
Figure: Asia Pacific Graphite Electrodes Market Revenue, - (US$ Billion)
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Graphite Electrodes
Market - By Type
Ultra high power graphite electrode held the largest market share in and is growing at a CAGR of 6% during the forecast period. The ultra high power graphite electrode is gaining traction due to its heavy usage in large capacity electric arc furnaces regarding steel manufacturing and refining processes. These graphite electrodes possess robust qualities such as high thermal resistance, crack resistance, durability, and superior quality which makes them a better option in comparison to other graphite electrodes. Furthermore, this form of electrode is used extensively in electric arc furnaces due to its high production efficiency and ability to reduce total production costs. Owing to such impressive features of UHP graphite electrodes, steel manufacturers globally are inclining towards UHP graphite electrodes to produce durable and high-quality steel and ultimately gain more capital. For instance, according to a report by Showa Denko, the world&#;s largest supplier of ultra-high-powered graphite electrodes, mentioned that its global graphite electrode business amounted to a huge figure of yen 300 billion (USD 2.73) out of which ultra high power graphite electrode segment accounted for more than 30% share. By , the company aims to expand all its top businesses that also include graphite electrode businesses, which, in turn, will expand its ultra high power graphite electrodes market share. Similarly, GrafTech International Ltd, a US based leading graphite electrodes manufacturer which deals extensively with ultra-high power graphite electrodes, has mentioned in its second-quarter results report that the company increased the production capabilities owing to high demand for graphite electrodes, and will continue to do the same in the coming years. These positive trends in ultra high power graphite electrode segment will ultimately boost the growth of the graphite electrodes market during the forecast period.
Graphite Electrodes
Market - By Raw Material
Needle coke held the largest share in the graphite electrodes market in , as it is the main raw material used in the manufacturing of graphite electrodes for the steel industry. These graphite electrodes are utilized to melt steel scraps in electric arc furnaces. Needle coke is of two types, either petroleum based or coal based. Petroleum needle coke is the most preferred needle coke in comparison to coal based, owing to the longer bake time of coal needle coke and the durable quality of petroleum needle coke. Due to the high qualities of petroleum needle coke, manufacturers are focusing to produce petroleum needle coke of the highest quality. For instance, according to the annual report for the fiscal year by US based graphite electrodes and petroleum coke manufacturing company Graftech International Ltd., Seadrift Coke LP has a massive production capacity of approximately 1,40,000 MT of petroleum needle coke, which makes it one of the largest producers of graphite electrodes globally. Seadrift Coke LP is one of the biggest acquisitions of Graftech International Ltd, and in the coming years, Graftech International Ltd aims to expand the production of super premium petroleum needle coke with the help of Seadrift, which, in turn, will boost the growth of the graphite electrodes market.
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Apart from graphite electrodes, needle coke is also employed in artificial graphite which is used in the production of lithium ion batteries for electric vehicles. Lithium ion battery is also projected to drive the market&#;s growth due to the increasing demand for electric vehicles globally. Petroleum needle coke based graphite is the desirable choice of electric vehicle manufacturers due to its ability to provide batteries with longer driving ranges and greater energy density. Graphite is the main material utilized in the production of anode material for lithium ion batteries. For instance, the Tesla Model S has 85 kg of graphite. Going forward, the growing market of the EV segment will expand petroleum needle coke based graphite in the lithium ion battery sector. In a recent development, Phillips 66 has announced in August that the company will focus on the development and expansion of battery components for electric vehicles which also include lithium ion batteries. Such growth in the lithium ion battery sector will boost the demand for petroleum needle coke based graphite, thereby expanding the graphite electrodes market in the forecast period.
Graphite Electrodes
Market - By Application
The steel manufacturing segment held the largest share in and is growing at a CAGR of 7% during the forecast period. The segment is projected to drive the growth in the forecast period owing to the massive usage of graphite electrodes for the production of steel in electric arc furnaces. The high thermal resistance capability of the graphite electrode makes it suitable for use in the high heat environment inside the electric arc furnace. Today, there is a growing demand for the production of electric arc furnace steel globally which is a positive trend considering the fact steel production was one of the worst hit industries during the pandemic. According to World Steel Organization, crude steel production globally amounted to 167.9 million tonnes (MT) in June , which is an 11.6% increase in steel production in the same period one year earlier. Furthermore, the expansion in construction, automotive, machinery, and other industries will demand a large amount of steel, which, in turn, will increase the massive usage of graphite electrodes.
Graphite Electrodes
Market - By End Use Industry
The construction sector dominated the graphite electrodes market in . The construction sector is anticipated to drive the growth of the graphite electrodes market globally during the forecast period owing to the high demand for rapid construction activity and infrastructure renovation projects in current times. The increasing activity in the building construction industry will support the demand for steel and non ferrous metals, ultimately boosting the requirement of a large number of graphite electrodes. For instance, according to the European Construction Industry Federation statistical report, the housebuilding segment in Europe is projected to have a positive investment growth rate of 5.5% in . The renovation projects and new housebuilding segments are projected to witness an investment growth rate of 5.7% and 4.8% respectively. Similarly, as per the report by India Brand Equity Foundation (IBEF), Foreign Direct Investment (FDI) received by India between April and March in the construction development sector which includes built-up infrastructure, housing, and construction development projects were valued at US$ 26.08 billion. So, these increasing activities in the construction sector will drive the demand for steel and other non ferrous metals, thereby increasing the growth of the graphite electrodes market during the forecast period.
Graphite Electrodes
Market - By Geography
Asia-Pacific region held the largest market share in up to 30%. The rapid expansion in the Chinese construction segment demands a large amount of steel for constructing various buildings and renovation projects. As a result of this, there has been a positive trend in steel production in . According to World Steel Association, crude steel production in China amounted to 93.9 million tonnes in June with a positive growth rate of 1.5%. Apart from China, India and Japan produced 9.4 million tonnes and 8.1 million tonnes of crude steel with an increased production growth rate of 21.4% and 44.4% respectively. Hence, these positive trends in steel production in the Asia Pacific region will immensely contribute to the growth of the graphite electrodes market during the forecast period.
The European region is projected to witness significant growth in the construction sector. According to the European Construction Industry Federation statistical report, the European construction industry (residential, commercial, renovation, civil engineering) is projected to witness a positive investment growth rate of 4.2%, which, in turn, will drive the growth of graphite electrodes market in the forecast period
Graphite Electrodes
Market Drivers
Growing market of electric vehicles globally will drive the growth of
graphite electrodes market
The huge production of electric vehicles globally is expected to be a key driver in the growth of the graphite electrodes market. More electric vehicles will demand more lithium ion batteries which will ultimately boost the requirement for more graphite electrodes. Graphite material is the key material used in the anode material in lithium ion batteries. The new energy vehicles (NEV) and electric vehicles (EV) segment in China is increasing rapidly. As per the reports by the China Association of Automobile Manufacturers (CAAM), the Chinese automobile industry will stay on a progressive track with NEVs (New Energy Vehicles) segment witnessing more demand in the coming years. Similarly, the region in Europe is anticipated to witness a positive trend in the electrically chargeable vehicles (EVs) and hybrid electric vehicles (HEVs) segments in the coming years. As per the European Automobile Manufacturers Association (ACEA) statistics, electrically-chargeable vehicles witnessed an increase in sales as the segment made up 10.5% of total car sales in in comparison to 3% in . Similarly, hybrid electric vehicles made up 11.9% of total car sales in , in comparison to 5.7% in . This progress in the electric vehicles segment will expand the production of lithium ion batteries, thereby boosting the growth of the graphite electrodes market during the forecast period.
Increasing global production of steel will boost the
growth of the
graphite electrodes market
Steel production worldwide is witnessing a healthy production rate amid the COVID-19 pandemic. Being one of the strongly hit industries by the pandemic, steel production is on a progressive track across different regions due to its high demand in the various end-use industry such as construction, automotive, appliances, etc. According to World Steel Association Stainless Steel Figures report, crude steel production accounted for million tonnes in globally in which the Asia-Pacific region was the largest, producing .7 million tonnes. The European and the Middle East region produced 139.2 million tonnes and 45.4 million tonnes of crude oil in . As per World Steel Association report, the steel production market is already showing a positive sign in steel production globally which will witness high usage of graphite electrodes, thereby driving the graphite electrodes market during the forecast period.
Graphite Electrodes
Market Challenges
Government regulations in China regarding industrial pollution might hinder the growth of
graphite electrodes market
China is the largest production and consumption of steel in the world and has been continuously contributing to the graphite electrodes market. However, the government regulations regarding industrial pollution have been a matter of concern in the steel production in the region. According to Graphite India Limited&#;s Corporate Presentation August report, China has closed 300 million tonnes of highly polluting and outdated steel production capacity due to the government&#;s industrial pollution control regulations, slowing down the production of steel over the past years. Therefore, the environmental regulations in China might continue to affect the production of steel, ultimately restricting the usage of graphite electrodes and the market&#;s growth in the coming years.
Graphite Electrodes
Industry Outlook
Investment in R&D activities, acquisitions, product and technology launches are key strategies adopted by players in the graphite electrodes market. Major players in the graphite electrodes market are:
Acquisitions/Product Launches
In June , Showa Denko KK acquired Hitachi Chemical Company (now Showa Denko Materials Co., Ltd.) which deals with graphite-based anode material for lithium-ion batteries. This acquisition will support the expansion of the graphite anode production, ultimately boosting the growth of the graphite electrodes market.
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