Rising Graphite Electrode Prices could Impact Steel Making

Graphite electrodes price has seen a steep increase in recent months, the increase has seen both in the global and domestic market; a month back it was around USD 2,000/MT and now it is increased steeply to USD 15,000/MT and with nil supply. To make 1 tonne of steel 2.5 to 3 kg electrodes are consumed. Electric arc furnaces utilize graphite electrodes, which are also employed in ladle furnaces via the blast furnace/basic oxygen converter route.

The Reasons behind this steep surge
Needle Coke which is a prime raw material used in making graphite electrodes witnessed a sharp hike in prices, from USD300/MT in Feb’17 to USD1200 at present. An environmental crackdown has affected Graphite producers in China in a big way, leading to the closure of around 50% of Graphite capacity. Chinese produces around 300,000 MT graphite electrodes monthly, out of which is used to export around 100,000 MT every month. Induction Furnace steel and Mini Mills has been closed down which was producing mainly low-quality long steel products.

The Indian Scenario
Electrode prices in India have risen in the past few months due to low availability, lower imports, and the antidumping duty & this has led to acute shortage of graphite electrodes in the market creating a major problem for the steel manufactures that are in the verge of the closure of their mills. ASPA (Alloy Steel Producers Association of India), through its Chairman and ED – Delhi,) has met Ministry officials and expressed their serious concerns of the steel producers and have requested the Government to take effective steps to deal with the situation.
The point ASAP raised were:
1. Increase availability of graphite electrodes
2. Impose Export duty on graphite electrodes
3. Withdrawal of Anti Dumping duty on imports, which is at USD 922.03 per tonne for graphite electrode imported from China Steel Manufactures from Odisha & Karnataka has commented on graphite crunch in the market that the demand is high for graphite electrodes in the past few months & there is no supply in the market as the suppliers are holding back the material. Also, Prices have increased from INR 120/kg to INR 950/kg for HP grade (graphite electrode) as there are no offers from the domestic supplier and this offer is for imported electrode from China. It looks like the major producers of Graphite electrodes in India are taking the benefit of the situation by creating artificial scarcity

India’s graphite industry
Graphite India Ltd and HEG Ltd are two major players, who hold a major share in Indian graphite industry. If we consider the total installed capacity for both the players is at around 180000 MT, however, they are operating at     70 – 75% of their installed capacity.

Exports – Imports
The exports of graphite electrodes as per the Dept of Commerce, India for FY’17 is 62800 MT, a 24% increase as compared to FY’16 which was 52778 MT. The imports in FY’14 (12800 MT) & FY’15 (13700MT), saw an increase in cheaper imports from China which flooded the Indian graphite market, DGAD imposed anti-dumping duty on imports from China in 2015. The import market became grayer in FY16 (6800MT) & FY17 (4000 MT) after anti-dumping duty resulting in the decline of imports by 40%.