graphite electrode
The Union Budget for FY19 has brought in some cheer to the Graphite Electrode consumers in India— the Electric Arc Furnace steel makers– as the Government has introduced a Tariff rate of 20% on Graphite Electrode exports. However, export duty on Graphite Electrodes remains Nil, but, if the Govt. at any point deems it necessary to put a check on the exports of Graphite Electrode, then accordingly it will impose a tariff on exports, which can be to a maximum of 20%.

 

Introduction of Tariff rate is governed by the intent to somewhat ease the soaring cost pressure on the country’s steel makers through the EAF route, as the electrode prices have been rising to record levels in the international markets on account of stronger demand and dwindling supply.

 

Internationally, supplies of the electrodes have shrunk significantly, mainly due to the decreasing production in China, where the government implemented production cuts for the electrodes on environmental concerns—the effect: exports from China diminished, and the global demand had turned towards other nations, such as India and Japan, and these countries saw abrupt rise in the electrode prices in their home markets.

 

In parallel to the supply squeeze, shortage of Needle Coke, which accounts for 70% of the electrode manufacturing cost, also has been adding fuel to the electrode price upsurge. Globally, Needle Coke supply has come under intense downward pressure due to the demand from the Lithium Ion industry getting stronger, eroding the supply for the electrode manufactures.

Indian Graphite Electrodes Exports Rise

The exports of the electrodes from India almost doubled during the Jan-Oct’17 period on year-on-year. During the first ten months of 2017, exports of graphite electrode from India grew by 49.2% to 64,379 MT from the exports of 43,146 MT in the Jan-Oct’16 period, an analysis of the data available with SteelMint shows.

 

In India, around 46% of steel production is through the Electric Arc route. The electrode market in the country is oligopolistic in nature, with only two producers—Graphite India Limited and HEG—dominating the supply scene.  According to the data available with SteelMint, the respective productions of the companies were at 98,000 MT and 80,000 MT during Jan-Nov’17; and, around 60,000 MT was exported till Sep’17.

 

In view of the lower domestic supply , resulting in higher prices, the EAF steel makers approached the government alleging that the domestic electrode manufacturers had been selling bulk of their produce in the international markets; and had urged the government to implement a solution. Heeding to their request, the Steel Ministry proposed the Finance Ministry to impose a 30% export duty on exports of the electrodes.

 

Countering the allegation, the electrode manufacturers said that they were forced to raise their prices due to escalating raw material, mainly Needle Coke, and non-imposition of Export Duty will help the Indian Graphite Electrode producers to leverage the benefits of prevailing robust demand and soaring prices worldwide.

Global Graphite Electrode Conference – 23 February, 2018

SteelMint is organizing a one day ‘Global Graphite Electrode Conference’ which will address the future demand/supply scenario of Graphite Electrode in 2018, in the context of sky-rocketing prices in the last year, uncertainties surrounding needle coke supply, how China will regulate the global markets, and an assessment of the challenges faced by the Indian buyers.

Source: http://events.steelmintgroup.com/indian-govt-introduces-20-tariff-rate-graphite-electrode-exports/