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Graphite Electrode Price &#; Rely on Market Demand & Raw Material Supply

Graphite electrodes are mainly made of petroleum coke, needle coke and coal pitch through calcining, batching, kneading, forming, baking, graphitizing and machining. Graphite electrode is a conductor which releases electric energy in the form of arc in the furnace to heat and melt the charge. The following are the main factors that affect the price fluctuation of graphite electrodes.

Steel products

1. The Increasing Demand of High-Quality Steel

This is one of the main factors propelling the market growth of graphite electrodes. The rapid development of steel industries such as construction, automobile, infrastructure, aerospace and national defense has led to an increase in steel demand and production.

Steelmaking by electric arc furnace

2. Electric Arc Furnace is the Trend of the Times

Affected by environmental protection and high production flexibility, the steel-making process in developing countries is changing from blast furnace and ladle furnace to electric arc furnace (EAF). Graphite electrodes are the main energy source for electric furnace steel consumption, and as much as 70% graphite electrodes are used in electric arc furnace steel making. The rapid development of electric furnace forces the production capacity of graphite electrode to be increased.

Manufacturing process of graphite electrodes

3. Graphite Electrodes are Consumables

The use period of graphite electrode is generally about two weeks. However, the production cycle of graphite electrodes is generally 4&#;5 months. During this use, the production capacity of graphite electrode is expected to be reduced due to national policies and the heating season.

4. High-Grade Needle Coke Short in Supply

Needle coke is a key raw material for the production of graphite electrodes. It is a calcined petroleum coke (CPC) which accounts for about 70% of the input cost of graphite electrode production. The price increase caused by the limited number of needle coke imports is the main reason for the direct increase in the price of graphite electrodes. Meanwhile, needle coke is also used in the production of electrode materials for lithium batteries and aerospace industries. These changes in supply and demand make the price of graphite electrode is inevitable.

Raw material of graphite electrodes &#;needle coke

Needle coke demand share percentage

5. Trade Wars Between the World's Major Economies

This have led to a sharp decline in China's steel exports, and forcing other countries to increase production capacity. On the other hand, it has also led to an increase in the export volume of graphite electrodes in China. In addition, the United States raised tariffs on Chinese imports, which greatly reduced the price advantage of Chinese graphite electrodes.

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Fastmarkets&#; price assessment for graphite electrodes, ultra-high power, fob China, was $4,250-4,560 per tonne on Thursday March 30, a rise of $620-790 (19.05%) since the market was first assessed at $3,460-3,940 per tonne on January 19, .

Similarly, Fastmarkets&#; price assessment for graphite electrodes, high power, fob China, was $3,600-3,780 per tonne on March 30, an increase of $610-630 (20.20%) from $2,990-3,150 per tonne on January 19.

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Graphite electrodes are used in steel production and have been subject to a sharp rise in feedstock costs. The prices of needle coke and petroleum coke have been continuously rising since the start of the year.

In China, the largest producer of synthetic graphite, coke prices have risen by 23.53% and 11.57% month-on-month, respectively, to around 8,000-13,000 yuan ($1,243-2,019) per tonne and 6,000-7,500 yuan per tonne, according to market sources.

In addition to rising feedstock prices, the European Commission has imposed anti-dumping duties on Chinese graphite electrodes, which has added to the upward pressure on prices for consumers in Europe.

Synthetic graphite for the lithium-ion battery anode sector has faced the same feedstock cost rises as for graphite electrodes. Additionally, graphite electrodes and synthetic graphite for anodes can rely on the same graphitization processing.

While the anode market has developed in China, it has increased competition for these graphitization facilities with the result that product availability has tightened significantly, raising costs and hindering production of both materials. There is an expectation that this tightness will continue this year, even if the worst has passed in China.

&#;Graphitization capacity might get less tight in comparison to the second half of last year, when China&#;s power crunch was at its height,&#; a battery producer told Fastmarkets. &#;But we have to admit that there is still prevailing tightness in availability across the anode supply chain, be it for the synthetic raw material or graphitization.&#;

At the same time that feedstock prices have increased and graphitization has become more challenging, production in China has been hindered by restrictions to prevent the spread of the latest wave of Covid-19 infections.

&#;Aside from the rise in prices of raw materials, there is concern about availability among downstream consumers amid China&#;s Covid-19 outbreak, causing transport interruptions for some producers in the north part of China,&#; a second anode producer source said.

Surging costs and tightening supply of raw materials and processing facilities have resulted in tighter availability of synthetic anode material for the rapidly growing electric vehicle sector, sources said.

Shifting to natural graphite

The combination of raw material and graphitization costs account for approximately 85% of the production cost of graphite anode material, according to sources. Therefore, the steep price rises in synthetic graphite are an incentive for battery manufacturers to increase the share of natural graphite in their anodes, which is estimated to be around 80% in China.

Anode consumers prefer synthetic material due to its higher purity and the consistency of its specifications. Additionally, synthetic graphite offers a longer lifespan and faster charging.

But natural graphite is about half the cost of synthetic, according to Fastmarkets&#; research team. As a result, industry participants expect natural graphite to take a higher share of the anode market because of its lower cost profile and higher capacity. Emerging production in South Korea, Japan and Europe is already favoring a higher share of natural graphite than in China, sources said.

Spherical graphite production is dominated by China, but other producers are starting to come on stream. Integrated natural graphite company Talga commissioned the first lithium-ion battery anode plant in Europe at the end of March.

Synthetic graphite production is highly energy-intensive, whereas natural material has a significantly smaller carbon footprint, which is another attraction for electric vehicles manufacturers marketing a sustainable product.

Spherical natural graphite prices have also been rising in response to increased demand and limitations on supply. Fastmarkets&#; price assessment for graphite spherical 99.95% C, 15 microns, fob China, was $3,500-3,800 per tonne on March 31, a rise of $1,050-1,200 per tonne (44.55%) from $2,300-2,750 per tonne on April 1, .

The production of natural graphite anode material in China has also been hit by supply-chain issues, such as strict anti-pollution controls in Luobei county and global logistics interruptions over the past two years, according to sources.

Natural graphite maintains a strong cost advantage over its synthetic equivalent although feedstock costs for spherical graphite have also risen.

Fine graphite flake prices surged following tightening supply from China and Africa, and a rise in demand. Fastmarkets&#; price assessment for graphite flake 94% C, -100 mesh, fob China, was $830 per tonne on March 31, an increase of $285 per tonne (52.29%) from $545 per tonne on April 1, .