Graphite Electrode Market - Growth, Trends, and Forecast 2020

Key Market Trends
Increasing Production of Steel through Electric Arc Furnace Technology

- Electric arc furnace takes steel scrap, DRI, HBI (hot briquetted iron, which is compacted DRI), or pig iron in solid form, and melts them to produce steel. In the EAF route, electricity provides the power to melt the feedstock.
- Graphite electrode is primarily used in electric arc furnace (EAF) steelmaking process, to melt steel scrap. Electrodes are made of graphite because of its ability to withstand high temperatures. In EAF, the tip of the electrode can reach 3,000º Fahrenheit, which is half the temperature of the surface of sun. The size of electrodes varies widely, from 75mm in diameter, to as large as 750mm in diameter, and up to 2,800mm in length.
- The price surge of graphite electrodes pushed up EAF mills’ costs. An average EAF is estimated to consume approximately 1.7 kg of graphite electrodes to produce one metric ton of steel.
- The price surge is attributed to industry consolidation, globally, capacity shutdown in China, following environmental regulation, and the growth of EAF production, globally. This is estimated to increase the production cost of EAF by 1-5%, depending on mill’s procurement practices, and this is likely to restrict steel production, as there is no substitute for graphite electrode in EAF operations.
- Additionally, China’s policies to tackle air pollution have been reinforced by strong supply curbs for, not only the steel sector, but also coal, zinc, and other sectors that generate particulate pollution. As a result, the Chinese steel production has drastically declined over the past years. However, this is expected to have a positive impact on steel prices and steel mills in the region, to enjoy better margins.
- All the aforementioned factors, is expected to drive the graphite electrode market during the forecast period.

Asia-Pacific Region to Dominate the Market

- Asia-Pacific region dominated the global market share. China occupies the largest share in terms of consumption and production capacity of graphite electrodes in the global scenario.
- The new policy mandates in Beijing and other major provinces in the country force the steel producers to close a capacity of 1.25 million tons of steel produced through environmentally harmful route in order to produce a new capacity of 1 million ton of steel. Such policies have supported the shift of manufacturers from conventional methods of steel production to the EAF method.
- The growing production of motor vehicles, along with the expanding residential construction industry, is expected to support the domestic demand for non-ferrous alloys and iron and steel, which is a positive factor for the growth of the graphite electrode demand in the coming years.
- The current production capacity of UHP graphite electrodes in China is around 50 thousand metric ton per year. The demand for UHP electrodes in China is also expected to witness a significant growth in the long term and an additional capacity of over 50 thousand metric ton of UHP graphite electrodes is anticipated to be witnessed by the later phases of the forecast period.
- All the above-mentioned factors, in turn, are expected to increase the demand for graphite electrode in the region during the forecast period.