Analysis and Suggestions About The Graphite Electrodes

At present, in the domestic graphite electrode market, the price is rising. The specific situation is as follows:

1. About the Carbon Plants: the price has risen since last week, and the major GE plant’s inventory are very tight. New orders have been arranged after Sept., and no inventory now. The decline in the price of GE between July and August also led to the basic shortage of inventories, and the current price rising. Some of the carbon plants make a decision to raise the price: for the small size (below Dia.400mm) increases $800/MT; for the bigger size (over Dia.450mm) increases $1500/MT. UHP600, UHP700supply are relatively tight, and the prices are always strong. One of the domestic plants, has received orders for about 2000 tons, and no goods for delivery. And because of the raw materials, there is no large granular imported needle coke, resulting in new production stop of UHP600/UHP700.

2. About the Steel mills: due to the steel price rising recently (screw steel price starts to rise), the EAF operating rate increases a lot. Especially in the steel mills of South China, this increasing results in a relatively tight supply of the GE. In the past, due to the decline of the GE price, all mills have no inventory; Now the price rises, but the mills have no inventory, and rush for goods with a high price. A small long holiday ( 7 days) at the beginning of October will come, domestic steel mills will purchase enough inventory for holidays, thus further raising prices again.

3. About the environmental protection: the government has stated clearly that the winter environmental protection policy will be implemented from October 1, a month earlier than last year. At the same time, in some provinces, during the winter heating period, they will face a shortage of natural gas. This situation will be lasting for three years, so the winter heating period will certainly affect the production of the GE, resulting in reducing production, price rising.

4. About the raw materials: needle coke is very scarce. And since July, the price of needle coke has risen sharply, increased about USD1300 per ton. The US government increases tariffs on needle coke by 25%, which increase the price of raw materials and the cost of production.

Based on the above situation, our current procurement work is to arrange production in time to lock the price and ensure delivery on time.

Here are some suggestions to the clients for procurement:
1. Choose a steady supplier in the long term to prevent some illegal vendors from supplying inferior products in a low price or delaying the delivery of goods which will have a strong impact on the client’s production.
2. Make a procurement plan and replenish stock in advance to ensure that the inventory could meet production demand for at least three months.
3. In order to guarantee the stable supply and lock in prices, we suggest that the customer could sign the contract as early as possible and increase the proportion of pre-payment. We will provide different quotations and supply plans on the base of different payment ratios.