Currently, the graphite electrode market in China is characterized by weak supply and demand, with prices continuing to decline. Following a sharp drop to near cost levels in April, domestic graphite electrode prices continued to cool in May. As of May 31st, the mainstream quotes for UHP 400mm electrodes were 15,000-16,000 RMB/ton, UHP 450mm (30% needle coke content) at 14,500-15,000 RMB/ton, UHP 600mm at 17,000-18,000 RMB/ton, and UHP 700mm at 20,500-21,500 RMB/ton. Factors such as sluggish terminal demand, hindered exports, and low-price competition within the industry have driven down transaction prices, leading to decreased willingness among graphite electrode companies to sell.
Raw Materials: Upstream raw material prices for needle coke remain stable for now, with general trading activity in the petroleum coke market. Low-sulfur coke shipments are average, with prices trending downward. Given the overall losses in the graphite electrode industry, many companies are adjusting the ratio of needle coke in their production as a primary strategy to reduce costs. However, the methods and degrees of adjustment vary across companies, resulting in a diversified market with inconsistent pricing for the same specifications of graphite electrodes.
Supply: Faced with a sluggish market and declining prices, companies are less motivated to produce. To avoid further inventory buildup and mitigate losses, many companies are adopting production control measures. These include equipment maintenance in line with repair schedules; for example, a top-five graphite electrode company recently undertook a two-week equipment overhaul in May. Some companies are opting for direct production halts, planning to resume once the market recovers.
Demand: End-use steel mills are operating at low capacity, with blast furnaces also running below capacity, leading to graphite electrode purchases being largely demand-driven without significant growth impetus. Recently, cost changes for electric furnace steel mills have been minimal, with steel prices remaining weak, resulting in reduced overall profitability for these mills. With the rainy season approaching in June, downstream demand is expected to weaken further, prompting some southern electric furnace steel mills (e.g., in Guangxi) to proactively suspend operations for maintenance.
Distance from Rebound: Given that upstream raw material prices such as needle coke and petroleum coke are unlikely to see significant increases in the near future, and considering the lack of robust demand from downstream industries and the complex international trade situation, graphite electrode prices are still in a bottoming phase. During this period, competition will hinge on cost and process control differences, testing the technical and product quality foundations of companies. By the third quarter, as production adjustment measures take effect and supply tightens, the graphite electrode market is expected to gradually recover from its slump, achieving some level of price stabilization.
