Graphite: Electrode prices increase rapidly as tightening environmental legislation interrupts graphite supply.

Roskill view: Consumers of Chinese graphite electrodes have reported large price rises of up to 200-400% during Q2 2017. Some consumers of graphite electrodes are believed to have switched from ultra-high power (UHP) graphite electrodes to lower cost, non-graphite, high power (HP) electrodes where possible, despite their lower quality. This has been achieved by running furnaces below full capacity to avoid breakages. It is not clear how long this switch can be sustained.

The price rises follow a period of increasing environmental legislation across the Chinese industrial minerals industry. For graphite, this has meant greater scrutiny of graphite processing practices and the closure of some graphite plants that fail to meet new standards. There has also been an increasing national interest in curbing pollution that has brought in more rigorous checks than previous local-level enforcement. Closures have previously been limited to the natural flake graphite sector; Chinese flake graphite production fell back by around 30% in 2016, although much of this closed capacity is believed to have now re-opened.

The graphite electrode industry is oligarchical with very few companies having the production technology. Prices are set by the major players including US company, GrafTech International, and Chinese company, Fangda Carbon New Material, which together, account for around 22% of global capacity for graphite electrodes, as well as other major companies in Japan, China, India, Russia and Germany. In August 2015, GrafTech became a wholly owned subsidiary of Brookfield Asset Management.

Prior to the price rises, graphite electrode prices had been relatively low for some time, with upward movement limited by poorly performing steel markets.

Meanwhile, the price of high grade Chinese flake graphite also increased in July. The price of 94-97% C, +80 mesh was reported to rise by 5-6%, based on strong demand from the expandable/expanded graphite market. Prices for other grades remain flat as producers continue to wait for the impact of rising demand from the battery industry to filter through.

Roskill’s Natural & Synthetic Graphite: Global Industry, Markets & Outlook report was published in May 2017. Click here to download the brochure or sample pages or access further information.

To discuss the graphite market with Roskill, contact Kerry Satterthwaite: kerry@roskill.com or Suzanne Shaw: suzanne@roskill.com