The Global Graphite Electrodes Market was valued at USD 4,431.49 million in 2020 and the market is projected to register a CAGR of over 6.5% during the forecast period (2021-2026). The primary raw material used for the production of graphite electrodes is needle coke (either petroleum-based or coal-based). Due to the COVID-19 impact in the first half of 2020, the global steel industry is in a disastrous situation, far worse than anything experienced since the beginning of this millennium, with serious implications for domestic steelmakers. The global steel production declined by 6% in the first half of 2020, to nearly 877 million metric tons, according to a Worldsteel. With the decline in steel production, the demand for graphite electrodes has been significantly affected in 2020.
- In the short term, the rising production of steel in emerging countries, rising availability of steel scrap in China thereby increasing the usage of electric arc furnaces are expected to drive the demand for the market during the forecast period.
- Rising production of steel through electric arc furnace technology in China is expected to act as an opportunity for the market in the future.
- Asia-Pacific region is expected to dominate the market owing to the strong demand from China at global level.
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 3,000Âº 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 millsâ€™ 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 millâ€™s procurement practices, and this is likely to restrict steel production, as there is no substitute for graphite electrode in EAF operations.
- Additionally, Chinaâ€™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.
- China is the largest steel producer in the world. Even though the COVID-19 outbreak has taken a toll on global crude steel production, the Chinese steel industry showed significant recovery in 2020. The overall crude steel production has increased by 5.89% and reached 1,054.4 million metric tons in 2020 from 2019.
- Additionally, China has introduced a new regulation on pollutant discharge permits, which may come into effect on March 1, 2021. Thus, this is likely to boost the EAF steel production trend in the country.
- The operating rate for UHP grade in China has not experienced any significant changes, as it was reported from ~53.7% in 2019 to ~52.3% in 2020. However, the non-UHP grade has seen significant decline, as it reported to be ~47.5% in 2020 from ~65.7% in 2019.
- All the above-mentioned factors, in turn, are expected to increase the demand for graphite electrode in the region during the forecast period.
The global graphite electrode market is partially consolidated with the top six players accounting for over 45% of the total market. In terms of market share, few of the major players currently dominate the market. Key players in the graphite electrode market include Fangda Carbon New Material Technology Co. Ltd, GrafTech International, Graphite India Limited, Jilin Carbon Co. Ltd, and SHOWA DENKO K.K., among others.
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