Shanghai-listed Fangda Carbon New Material Company (Fangda Carbon) plans to build a 50,000 tonnes/year ultra-high-power (UHP) grade graphite electrodes plant in Ganmei Industrial Zone,Meishan, Southwest China's Sichuan province, according to a company released on July 10.

Shanghai-listed Fangda Carbon New Material Company (Fangda Carbon) plans to build a 50,000 tonnes/year ultra-high-power (UHP) grade graphite electrodes plant in Ganmei Industrial Zone,Meishan, Southwest China’s Sichuan province, according to a company released on July 10.

 

The project, under the management of Fangda’s subsidiary - Meishan Fangda Rongguang Carbon Company (Meishan Fangda) - is estimated with a total investment at Yuan 1.4 billion ($210 million) and to develop in stages with each stage being 24 months, according to the release.

 

A company official confirmed the basic details but he declined to disclose more details regarding the project.

 

Fangda has long identified the great potential in China’s graphite electrode market.

 

“In the past few years, because of supply-side reform, induction furnace closure, and intensifying environmental protection survey, the ratio of electric-arc-furnace (EAF) steel output has been on the rise, and demand for graphite electrode for EAFs, thus, have been growing substantially,” the company stated in its 2017 annual report released on May 17.

 

The Sichuan project is just three months after Fangda signed an agreed with Shanghai Baosteel Chemical Co to build a 100,000 t/y graphite electrode project in Northwest China’s Gansu province.

 

With Beijing’s growing emphasis on environmental protection, EAF steelmaking has been identified with growing market potential in the future though for the time being, EAF steel capacity accounts for only about 10% of China’s total steel capacity, Chinese market sources agreed.

 

“We do believe the prices of UHP graphite electrodes will remain strong in the future as EAFs may be widely adopted among Chinese steelmakers too,” a steel scrap analyst Everbright Securities commented, and the margin of graphite electrodes, therefore, may grow further as its production technology, being complicated, is hard to populate in the short and medium term, he added.

 

China is the world’s largest graphite electrode producer and therefore a major supplier with its output hitting 600,000 tonnes last year, though the total capacity is estimated at approximately 1 million t/y, according to the statistics from China Carbon Industry Association.

 

Intensifying curbing efforts on China’s steel mills’ sintering, coking, and blast furnaces since 2017 saw the average price of 500mm UHP graphite electrodes in East China’s Jiangsu province, the country’s core EAF steelmaking market, shoot to an all-time high of Yuan 173,500/tonne as of August 23 as against Yuan 13,500/t at the beginning of the year, Mysteel’s data showed.

 

An official from an EAF mill in Tainan, South Taiwan, that has been sourcing graphite electrodes from China, has felt the explosive growth in China’s demand first-hand.

 

“There was panicking buying of graphite electrode early 2017 by Chinese EAF mills when they came to realize that Beijing would be deadly serious about pollution control, and we had to buy whatever sizes of electrodes that were available at high costs, even though we had to cut them into smaller sized for our own use,” he recalled.

 

Fangda Carbon, headquartered in Lanzhou city, Northwest China’s Gansu province, boasts 190,000 tonnes/year of graphite electrode, 60,000 t/y of needle coke, 144,000 t/y of petroleum coke and 10,000 t/y of carbon-based new materials with it plants in Lanzhou, Fushun city in Northeast China’s Liaoning, Hefei city in Central China’s Anhui and Chengdu in Sichuan.

 

The remaining strong performance of graphite electrode market saw Fangda Carbon’s net profit skyrocket nearly 25 times to Yuan 1.9 billion on year for the first quarter of 2018.

 

Written by Rebecca Zhu, rebeccazhu@mysteel.net.cn, and Hongmei Li, li.hongmei@mysteel.com