With regulations galore in recent times targeting the steel industry, and the graphite electrode manufacturing industry in turn, can graphite electrode prices be expected to stabilize?
It was in 1918 that Tokai Carbon set up shop for carbon-based electrodes in Tokyo, Japan. It remains one of the most established graphite electrode manufacturers in the world, even as the other Asian giant, China, has been a veritable powerhouse (pun unintended) in the industry. Recent regulations however are discussed as having put a bit of a dampener in the industry, especially that of graphite electrode exports. With India strictly curbing imports, and China cracking down on pollution, graphite electrode manufacturers within India may step up, and exports are already rising. However, with no dearth of infrastructural need in sight, Technavio’s industry analysts predict a CAGR of close to 5% in the global graphite electrode market over the next five years (source).
Across the globe, but especially in developing nations, rapid industrialization continues, with the focus now on quality infrastructure. This reinforces the need for high-quality steel, and provides graphite electrode manufacturers with immense opportunity to meet continuing demands. The prices of needle coke have been inconsistent, however, causing fluctuations in turn in the global market for graphite electrodes. Needle coke is used in the manufacture of Ultra-High Power (UHP) graphite electrodes which are in high demand due to their use in a quicker smelting process for steel manufacture.
The cost of being invaluable
The building and construction, aviation and automotive industries are some of the most prominent end-users of the graphite electrode industry. The advent of the electric vehicle has created another, albeit indirect market for the graphite electrode industry through the lithium ion battery. This puts immense pressure on graphite electrode manufacturers to press to swiftly curb instability and strengthen regulations relating to process across nations. While demand for graphite electrodes rise, so does its price across the globe. The markets seem bullish in the early half of 2018, but is the trend set to continue and does it cease to be as volatile a market?
The APAC scenario
Demands in China have risen extremely high due to industrialization demands, and India also showcases trends towards higher demands. Electric arc furnaces (EAF) in smaller Asian countries such as Vietnam and Thailand have been regular consumers of Chinese steel, but are now trying to move out of its shadow via curbs on imports, affecting the EAF graphite electrode market. While current Chinese steel exports do add up to almost three times that of Japan’s annual output, Tokai Carbon and other Japanese powerhouses have seen a surprise rise in 2018 figures. Technavio expects that while it may not immediately stabilize, the graphite electrode industry is set for steady growth in 2018 and the next few years.
Fueled by the increased demand for graphite electrodes from the Asia-Pacific region, this still capital intensive industry has seen countries within APAC dominating the market with a share close to 70% in 2017. The European and Middle Eastern regions are set to also witness growth in coming years. The demand for crude steel across the globe increased by over 5% in 2017, as compared to 2016, and this is reflected quite directly in the growth of the graphite electrode industry. Mechanical machinery and the oil and gas industry have been other consumers of graphite electrodes. Considering that most customers of the market in consideration are steadily growing, the expectation is that the graphite electrode market continues to grow across the globe.
While unsteady, the growth of the graphite electrode market has been constant. There remain several challenges affecting it, especially with graphite electrode manufacturers facing the brunt of regulation updates, but the growing demands for EAF graphite electrodes and the technological advancements helping along manufacturing processes are sure to tide it through.
Read our latest market report surrounding the graphite electrode industry here.