The ongoing negotiations on long term contract price for Graphite Electrodes in Japan are seeing higher prices due to Needle Coke supply shortage emanating in the international markets. Of late, the price negotiations have reached around USD 9,000/MT from around USD 6,000/MT before the occurrence of the Harvey hurricane in the US in the late Aug’17. Subsequent to the refineries resuming operations by the beginning of Nov’17, the price negotiations went higher to around USD 7,500/MT.
The higher price negotiations are influenced by the shortage in Needle Coke production in the key international regions mainly due to the restricted Petcoke supply post the hurricane incident. As a matter of fact, the electrodes are derivatives of Petcoke, a refinery byproduct, rich in Carbon. Compounding to the supply squeeze, the growing demand for Lithium Ion batteries worldwide is also catalyzing towards the Needle Coke supply getting lower.
However, in a global environment dominated by Needle Coke supply shortage, leading to upsurge in the electrode prices, the domestic prices in Japan are however relatively free from rapid fluctuations.
In Japan, Showa Denko became the largest Graphite Electrode manufacturer in the world by the merger with SGL Group; in the merged company German officials took top positions, and they prefer implementing a unified price to eliminate price differences in Japan, Europe and USA.
However, at the same time, graphite electrode sellers now prefer short-term price contracts, such as monthly or quarterly, to hedge against the disadvantages of long-term contracts in the event of upward price movement.