Chinese electrode prices to stay flat in near term
“Given the supply binge we’ve seen recently, it’s hard to imagine even a slight price recovery in the domestic graphite electrode market in the near future," a Shanghai-based market watcher said. "On the other hand, the domestic steel market has also shown signs of softening after the boom we experienced in April," he added.
Many steel mills, mainly located in North China’s Henan and Hebei province and East China’s Jiangsu province, have slowed their pace of procuring electrodes due to the production curbs that had remained in place over in the first three months of this year as an anti-pollution measure, Mysteel Global notes.
”This softening of demand and rising stocks among electrode makers have both served to prevent market prices from moving up further,” a market analyst from East China’s Shandong province said. “Prices may possibly fall in coming weeks if the market’s consumption can’t catch up with the rise in supplies,” he predicted.
The capacity utilization rate of the 53 independent electric-arc-furnace (EAF) steelmakers Mysteel charts nationwide had nosed down by 0.92 percentage point on week as of May 9 to 67.95% after six straight weeks of rises, according to Mysteel’s latest weekly survey.
The same day, the utilization rate of blast furnaces in operation among the 247 Chinese steel companies across the country under Mysteel’s survey experienced its first slight on-week dip after rising for seven successive weeks, easing to 83.43%.
The market analyst pointed out that domestic EAF steel mills will purchase more UHP-grade electrodes above 600mm in coming years as consumption of this grade of electrode is being actively encouraged by the National Development & Reform Commission for its higher energy efficiency. At the same time the country’s scrap usage is likely to enjoy a stable pickup in coming decades, in tune with the greener development of China’s steel industry, the analyst said.
Meanwhile, Jiangsu Shagang Group (Shagang), China’s largest EAF steelmaker headquartered in Zhangjiagang city, Jiangsu province, has cut its steel scrap procurement price by Yuan 40/t for deliveries from May 15 onwards, as Mysteel Global reported. The recent rise in scrap deliveries to its works pushed the steel mill to slash its buying prices to leverage the abundant supplies.
Domestic finished steel prices declined for straight five days last week, as market sentiment turned cautious amid higher steel output, softening demand and the rising tension between China and US over trade. As a result, Mysteel’s national average price of HRB400 20mm dia rebar lost Yuan 85/t on week to reach Yuan 4,176/t including the 13% VAT as of May 14.
Written by Rebecca Zhu, rebeccazhu@mysteel.net.cn
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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