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The reason for the shortage of graphite electrodes

May 21, 2019
There are several causes for the shortage, all coming together at the same time.
1.The primary reason is that in the recent past prices were too low. Electrode prices had declined for several years. Producers were at best breaking even and most were losing money. Not surprisingly they made sharp cutbacks in electrode output. Adding to low profitability, two outside influences served to disrupt supply. Chinese production was cut as a casualty of their anti-pollution drive, while Hurricane Harvey temporarily curtailed work at a major site in the United States. The curtailment in China will abate but not go away completely. 
2.In recent years electrode makers have reduced capacity, with some shuttered for good as their mill customers bought competitively priced semi-finished products and re-rolled rather than melting scrap. At the same time China has cut graphite electrode capacity of late, by up to around 50%, according to numerous producers, amid government-mandated closures to curb emissions .

3.Also, during the “bad years” electrode producers ran down their stocks to generate cash as they could not get credit lines.This means there is no stock on the ground and demand from mills — particularly EAFs — has increased sharply, taking electrode suppliers by surprise.
4.In addition to a shortage in Electrodes themselves, a primary raw material – Needle Coke was also in hot demand and continues to be pursued by a fast growing Lithium Ion battery industry.
5.In 2017, China produced around 520,000 MT Graphite Electrode, out of which 201,695 MT was exported and the rest utilized for domestic consumption. However, this ratio of domestic consumption versus exports will be a thing of the past as the quantum of export volume will shrink substantially in 2018 due the increasing Graphite Electrode domestic consumption in China, which is expected to reach a mammoth level of around 532,000 MT this year.