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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As of March 11, Mysteel's benchmark price for 350mm diameter UHP electrodes in East China's Jiangsu province stood at Yuan 15,000/tonne ($2,113/t), lower by Yuan 300/t on month, and that for the 600mm electrodes also lost Yuan 300/t on month to Yuan 17,200/t, both including the 13% VAT.
Most electric-arc-furnace (EAF) steelmakers in China suspended their production during the Chinese New Year holiday in mid-February, before their profit margins turned negative rapidly later that month, both of which weakened mills' demand for feed materials and weighed on domestic electrode prices as well, Mysteel Global learned.
In March, EAF mills' electrode consumption will show a marked increase as they restart operations from their holiday breaks, according to Mysteel's survey. The average capacity utilization rate among the 87 independent EAF steelmakers under Mysteel's regular tracking had jumped 19.19 percentage points from the end of February to touch 48.3% by March 7, and the mills will bring more idled furnaces back online this month, the survey showed.
On the other hand, domestic producers of graphite electrode have seen their production costs rise continuously since January and may keep climbing in March, as the prices of coal tar pitch are climbing steadily, while those of petroleum coke and needle coke are stable, according to Mysteel's statistics.
For example, Mysteel's assessment of medium-temperature coal tar pitch in North China's Hebei &#; the country's major steel producing base &#; stood at Yuan 5,400 t/d including the 13% VAT as of March 11, higher by Yuan 300/t from the end of February.
As a result, electrode producers are likely to incur higher production costs in March, which will provide firmer support for the prices of domestic UHP graphite electrodes, Mysteel Global noted.
Written by Anthea Shi,
Edited by Alyssa Ren,
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