Graphite electrodes play a major ingredient for the Electric Arc Furnace steelmaking process. While it was only a tiny fraction all steel that was produced prior to the year the year 2017, demand for it grew quickly to almost 9 billion USD by the year 2020. It is predicted that demand will exceed USD 17 million by 2034. While the steel sector dominates end-use, aluminum production (for certain EAF mini-mills as well as cathode process) also makes significant use of the material.
Price fluctuations within the graphite supply chain are characterized by a vast effect for downstream sectors. This article analyzes the purchasing strategies of major end users and explains how the commodity is highly receptive.
The guide helps customers understand the tactical and strategic negotiation tools to get the most effective Graphite electrode prices. The report gives a comprehensive analysis of the pros and cons of the most popular pricing strategies that will help buyers choose the best supplier to meet the objectives of their industry.
The global graphite electrodes industry is extremely fragmented, with many smaller and mid-sized companies who supply the market. About 50% of total market sales are accounted for by the top ten companies, and the Asia-Pacific region is the most dominant.
Key producers include: SEC Carbon (Saudi Arabia - joint venture between Saudi Aramco, SABIC and GrafTech), Fangda Carbon Group (China), Kaifeng Carbon Co Ltd (China), Graphite India Limited (HEG Ltd.) as well as Tokai Carbon Co Ltd (Japan). Several large producers invest in the production of graphite or coke plants and have merged their steel mills with coke plants for the purpose of leveraging economies of scale.
The graphite industry depends heavily on the steel cycle of production as well as the costs of raw materials. If there is an increase in steel demand, (often due to growth in infrastructure and automotive), graphite electrode prices are able to rise. In contrast, a decrease in production could lead to reduced demand and a decrease in costs.
Graphite is created by mixing petroleum coke, needle coke as well as carbon black at high temperatures and pressures. Prices and availability of crude oil therefore has a direct impact on the overall price of manufacturing. The availability of coke for needles can create supply uncertainty and volatility.
Buyers of the Graphite Electrode industry typically sign agreements with their suppliers to guarantee supply. This can prevent future shortages or incur additional costs should there be a shortage. The negotiation of contracts is risky, because buyers could be forced to pay more in the future because of poor contract terms. This is why it's important to evaluate carefully supplier suggestions, and develop negotiations that balance the needs of both sides. This study provides the top practices for how to decide the right mix between contract purchases and spot orders, along with strategies for negotiating advantageous contract terms. This research also includes best practices on engaging with existing suppliers, and identifying KPIs that can be used to evaluate their performance.
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