In 2022, the overall performance of the graphite electrode market will be mediocre, with low-load production and a downward trend in downstream demand, and weak supply and demand will become the main phenomenon.
In 2022, the price of graphite electrodes will rise first and then fall. The average price of HP500 is 22851 yuan/ton, the average price of RP500 is 20925 yuan/ton, the average price of UHP600 is 26295 yuan/ton, and the average price of UHP700 31053 yuan/ton. Graphite electrodes showed a rising trend from March to May throughout the year, mainly due to the rebound of downstream enterprises in the spring, external procurement of raw materials for stocking, and the positive atmosphere for entering the market under the support of a buying mentality. On the other hand, the prices of needle coke and low-sulfur petroleum coke, raw materials, continue to rise, which has a bottom support for the price of graphite electrodes. However, starting from June, graphite electrodes have entered a downward channel, and the weak supply and demand situation has become the main trend in the second half of the year. Downstream steel mills are underutilized, graphite electrode production is at a loss, and most enterprises have shut down. In November, the graphite electrode market rebounded slightly, mainly due to the improvement in the demand for graphite electrodes driven by the rebound in steel mills. Manufacturers took the opportunity to push up the market price, but the boost in terminal demand was limited, and the resistance to pushing up graphite electrodes was relatively large.
In 2022, the gross profit of ultra-high-power graphite electrode production will be 181 yuan/ton, a decrease of 68% from 598 yuan/ton last year. Among them, since July, the profit of ultra-high-power graphite electrode production has begun to hang upside down, and even lost a single ton to 2,009 yuan/ton in August. Under the low-profit mode, most graphite electrode manufacturers have shut down or produced crucibles and graphite cubes since July. Only a few mainstream companies are insisting on low-load production.
In 2022, the national average operating rate of graphite electrodes is 42%, a year-on-year decrease of 18 percentage points, which is also the lowest operating rate in the past five years. In the past five years, only 2020 and 2022 have operating rates below 50%. In 2020, due to the outbreak of the global epidemic, coupled with the sharp drop in crude oil, sluggish downstream demand, and inverted production profits, the average operating rate last year was 46%. The low start of work in 2022 is due to the repeated epidemics, the downward pressure on the global economy, and the downturn in the steel industry, which makes it difficult to support the market demand for graphite electrodes. Therefore, judging from the two-year low start, the graphite electrode market is greatly affected by the demand of the downstream steel industry.
In the next five years, graphite electrodes will maintain steady growth. It is estimated that by 2027, the production capacity will be 2.15 million tons, with a compound growth rate of 2.5%. With the gradual release of China’s steel scrap resources, the electric furnace has great potential for development in the next five years. The state encourages the use of steel scrap and short-process steelmaking, and encourages enterprises to replace the production capacity of the electric furnace process without increasing new production capacity. The total output of electric furnace steelmaking is also increasing year by year. China’s electric furnace steel accounts for about 9%. The Guiding Opinions on Guiding the Development of Electric Arc Furnace Short-process Steelmaking (Draft for Comments)” proposes that by the end of the “14th Five-Year Plan” (2025), the proportion of electric furnace steelmaking output will increase to about 20%, and graphite electrodes will still increase space.
From the perspective of 2023, the steel industry may continue to slump, and relevant associations have released data predicting that steel demand will recover by 1.0% in 2023, and the overall recovery will be limited. Although the epidemic prevention and control policy is gradually relaxed, economic recovery will still take some time. It is expected that the graphite electrode market will slowly recover in the first half of 2023, and there will still be some resistance to price increases. In the second half of the year, the market may begin to recover. (Source of information: Longzhong Information)
Post time: Jan-06-2023