Govt may push Graphite electrode makers to cut prices

After the shutdown in China, Indian graphite electrode manufacturers saw a substantial jump in demand and followed by a five-fold jump in prices,which has increased raw material costs of domestic steel makers across the board.

This substantial price jump has now led to government intervention to protect small steelmakers from higher prices. Government plans to levy export tariff on graphite to moderate the prices. Also, government wants the manufacturers to get into quarterly contracts with graphite manufacturers to ensure regular supply to further stabilize prices. 

India’s graphite manufacturers account for 25 per cent of global production if the export tariff is imposed the move might lead to margin pressures on big international steelmakers. Opposing the move manufacturers say they might pass on the loss to domestic customers, which in turn will increase pricing pressure on domestic steelmakers.

Manufacturers have cut the prices by 20 per cent for February and March. However, prices are expected to firm up going ahead, as graphite manufacturers face shortfall of its major raw material needle coke, which accounts for 61 per cent of raw material costs, which is made from either coal tar or petroleum. 

Industry analysts expect it will take time to rebalance the pricing dynamics of needle coke and thereby the prices of graphite, till then the steel manufacturers are expected to see high graphite electrode prices.