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A shortage of graphite electrodes will affect steel mills

May 21, 2019
1.Graphite electrode prices continue to increase and some steelworks may have to rejig their production schedules because of the shortage.Electric arc furnaces utilize graphite electrodes, which are also employed in ladle furnaces via the blast furnace/basic oxygen converter route.
Rather than halting production, some mills may work weekends or night shifts, when electricity is cheap and costs lower, as they cannot operate for 24 hours, electrode producer sources said.
2.The increased volume of Graphite Electrode trade is the result of an improvement in demand driven by growth in the EAF production and also the soaring Graphite Electrode prices coupled with lack of availability of the same created a panic like situation among the EAF steelmakers. Earlier, steelmakers that used to stock for one month of Graphite Electrode inventory, increased their buffer stock to last for 2-3 months in view of uncertain supplies and rising prices. All this gave further impetus to the Graphite Electrode suppliers with heightened trade volumes and in turn firm prices.
3.For Steel-making via the EAF route, there is no substitute for Graphite Electrodes. Global manufacturers, who have high dependence on Electrode imports from China, need to prepare themselves for further supply tightness of Graphite Electrodes as China rapidly increases its EAF capacity and implements reforms aimed at culling polluting capacities.
4.In 2017, China remains the biggest producer and consumer of Graphite Electrodes, followed by the European Union and Japan. Whereas, the major countries that imported graphite electrodes are the United States of America, Russia, Iran and Turkey. Globally just over 25% of steel is made in electric arc furnaces. However, this trend is fast changing, and EAF route of production is gaining more and more popularity due to the inherent environmental friendliness over the Blast Furnace method. In the United States 67% of steel is created using the EAF method, and in some other major markets like Iran it is over 85%.According to Industry estimates, China’s EAF Output in 2017 was around 52MnT, which is likely to increase to 82 MnT in 2018 and 120 MnT by 2020.
5.China’s closure of inefficient induction furnaces and polluting blast furnaces are expected to be replaced by electric arc furnace. New policy measures announced in China ensures zero growth in steel capacity by requiring steel capacity replacement to be kept in ratio – 1.25:1 or 1:1 (regional differentiation).