Author / Baked buns under the stars
Edit/Spinach's Starry Sky
Typesetting/Leeks under the stars
Since the beginning of this year, some industries (such as large models) and low-altitude economy) have received great attention from investors, but there are still some traditional industries that are still in the cold winter, such as the steel industry. From January to March this year, the price of rebar fell all the way, and the decline in the Chengdu market has reached 520 yuan/ton.
The steel industry ushered in the worst start in nearly five years. Moreover, many steel companies are facing the dilemma of losses, and survival is the top priority for steel players.
If you look upstream, there is one industry that investors believe can be the first to recover, and that is graphite electrodes. For example, Fangda Carbon (600516), one of the leaders, rose 4% in one day, and after more than two months of stock price shocks, it finally ushered in the "iron tree flowering".
However, it must be pointed out that Fangda Carbon's net profit in the first quarter was only 170 million yuan, a year-on-year decrease of 23%. And its price is still at a low level compared to the madness of 2022.
Graphite electrode price trend
In addition, there is one thing that needs to be paid attention to in the near future, that is, Japan began to launch an anti-dumping investigation on Chinese graphite electrodes, which will undoubtedly affect domestic graphite players more or less in the future.
So, can graphite electrodes be the first to recover?
The highlight moment of a year or two ago
To put it simply, a graphite electrode is a carbon product that has been graphitized. If we further disassemble upstream, you will find that the cost of raw materials such as petroleum coke, needle coke, and coal pitch accounts for nearly 70%, which is very high.
At the same time, there are many graphite electrode production processes (up to 11 steps), such as ultra-high-power graphite electrodes, with a production cycle of up to 65 days. Moreover, large-scale ultra-high power is also the future development direction, after all, there is a green and low-carbon trend of stimulation. For example, Shengneng Group (02459) is the world's leading manufacturer of ultra-high power graphite electrodes, with an annual production capacity of 30,500 tons.
Graphite electrode cost
Because the proportion of raw materials is relatively high, when the price of some upstream raw materials rises, the cost pressure of graphite electrode enterprises will increase sharply, and the desire to relieve the pressure by raising the price of graphite electrodes will be higher.
In 2021-2022, it can be said that it is the highlight moment of graphite electrode players. For example, Fangda Carbon's revenue increased by 31% and net profit increased by 98% in 2021, mainly benefiting from the increase in product prices. Shengneng Group's net profit in 2022 was US$7.5 million, a year-on-year increase of about 70.8%, and its product prices have increased significantly, whether it is sold to the Americas or Europe.
Continuing to dig deeper, the author thinks that there are two reasons: one is that the price of upstream raw materials promotes the cost of graphite electrodes, and the other is the impact of limited electricity and limited production, the graphite electrode market is under-started, and the output declines, resulting in limited supply growth.
Back and forth, let the graphite electrode players "lie down and win" for two years. In retrospect, it was a real highlight for the players.
Second, a good helper of electric arc furnace
If we look downstream, the main application scenario for graphite electrodes is electric arc furnace steelmaking, after all, the heating conductor is usually made of graphite material. From the point of view of consumption intensity, graphite electrodes are consumables, and the consumption of different types of electric arc furnace graphite electrodes is about 1.2-2.5 kg/ton.
Therefore, the demand for electric arc furnace steelmaking is the ballast stone of graphite electrodes.
Judging from the recent situation, the demand for scrap steel in steel mills has increased, the profits of most electric arc furnace steel mills have begun to make profits, and the production enthusiasm of steel mills has increased, so the capacity utilization rate and operating rate have increased slightly (the current operating rate has exceeded 65%). It can be said that this is a good sign.
Graphite electrode application scenarios
In the longer term, the proportion of electric arc furnace steelmaking in the mainland is much lower than that of European and American countries, according to the current trend of low-carbon emission reduction, according to the estimation of professional institutions, by 2035, the proportion of electric furnace steel in the mainland will increase to 30%, which can achieve carbon dioxide emission reduction of about 15%. So it can be said that the future is promising.
The operating rate of electric arc furnace steel mills
At present, the development of electric arc furnace steelmaking is not developed, and the important reason is that the scrap resources are relatively insufficient, and the steel used in the infrastructure and housing fields has a long recovery period and a certain degree of difficulty. As a result, the cost of all-scrap electric furnace steelmaking is relatively high. It is believed that if this problem is solved, electric arc furnace steelmaking will usher in spring.
3. Crawl out of the bottom?
It can be said that electric arc furnace steelmaking is a large user of graphite electrodes, and according to the author's observation, the slowdown in steel production in recent years has affected the downstream demand for graphite electrode products.
In the short and medium term, the demand for graphite electrodes is not likely to grow explosively. According to the analysis of professional institutions, the consumption of graphite electrodes this year is about 900,000 tons, and there will be no particularly significant growth.
From the perspective of supply, the mainland is the world's largest supplier of graphite electrodes, accounting for more than 60% of the world's production capacity. From 2018 to 2022, the compound annual growth rate of graphite electrode production was 8.2%. According to the analysis of professional institutions, the future.
Therefore, it is still unknown when the price of graphite electrodes will climb out of the bottom.
Note: This article does not constitute any investment advice. The stock market is risky, and you need to be cautious when entering the market. There is no harm in buying and selling.