Low operating rate of EAF steelmaking, high pressure on graphite electrode enterprises
Low operating rate of EAF steelmaking, high pressure on upstream graphite electrode enterprises
In the past two years, China's electric arc furnace overall operating rate has been at a relatively low level, resulting in insufficient demand in the upstream graphite electrode market. In addition, manufacturers of graphite anode materials have purchased a large number of raw materials, pushing up the prices of these materials. A large number of graphite electrode manufacturers are adapting to market trends and transitioning to the production of graphite anode materials.
At the recent China Carbon Network Carbon New Material Industry Chain Summit Forum, industry experts said that blind transformation of graphite electrode enterprises is not recommended. Lithium battery anode enterprises are facing overcapacity, reducing costs and improving efficiency are top priorities.
In the past two years, the survival of the graphite electrode industry has become increasingly difficult. On the one hand, the prices of raw materials such as petroleum coke, needle coke and coal tar pitch continue to rise. On the other hand, due to the impact of the war between Russia and Ukraine on the global economy, as well as the decline in real estate demand and the impact of the epidemic, the overall operating rate of the downstream electric arc furnace steel enterprises is insufficient, and the demand for production consumables such as graphite electrodes is weak.
Sun Qing, honorary chairman of the China Carbon Industry Association (CCIA) , said that due to the huge losses in the steel industry in 2022, which directly affected the graphite electrode industry, electrode prices have continued to decline since July 2022. Currently, most graphite electrode manufacturers have suffered losses.
Wang Zhonglin, Chairman of Sichuan Guanghan Shida Carbon Co., Ltd., told the Associated Press, "Due to the low operating rate of electric arc furnace steelmaking and the fact that nearly 80% of the graphite electrode industry is supplied to electric arc furnace steel enterprises, the impact on the graphite electrode market is still very significant."
Data from China Carbon Network shows that the production capacity of the graphite electrode industry is about 1.8 million tons. In 2022, the production capacity is less than 800,000 tons, and the overall industry operating rate is only 42%.
For downstream steel enterprises, on the one hand, falling steel prices squeeze industry profits; On the other hand, the high operating cost of scrap raw materials, as well as high production costs such as electricity prices and consumables, result in the loss of electric arc furnaces as soon as they start production. In order to improve efficiency and reduce cost, steel enterprises have gradually eliminated small-tonnage electric arc furnaces and replaced them with ultra high power large-tonnage electric arc furnaces. The internal demand structure of the graphite electrode market has also changed to a certain extent.
In 2022, steel enterprises accelerated the electric arc furnaces capacity replacement pace. According to Mysteel statistics, involving 17 steel plants with a capacity of 22.78 million tons in total. Steel enterprises have successively replaced small electric arc furnaces with ultra high power and large tonnage electric arc furnaces of over 100T. For example, an iron and steel plant in Chongqing has replaced the capacity of two 70T electric arc furnaces with one 130T electric arc furnace, and a steel plant in Central China has replaced the original four electric arc furnaces below 70T with two 100T electric arc furnaces.
Wang Zhonglin said that the product is developing towards large specifications and ultra high power. Since last year, although the overall decline in the industry has been severe, the demand for ultra high power graphite electrodes above 600mm has only decreased by 10%, while the demand for high power and ultra high power graphite electrodes has decreased by nearly 30%. Follow us to learn more about the market trend of electric furnace steel.
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