A major graphite electrode producer confirmed to S&P Global Platts Thursday it had renegotiated contracts with some of its more "transactional" buyers for the rest of the year.
Prices have increased around 40%-80%, and up to 100% for some, depending on the kind of deal and the level the contracts where initially signed at.
What was surprising, the supplier said, was the lack of pushback on the move.
"You could hear a pin drop," the supplier said.
The source said needle coke suppliers were clamoring to transition to quarterly pricing, a move which was likely to be mirrored by electrode producers with their steel mill customers -- coke suppliers can sell into other markets, such as the lithium-ion battery sector, and will not want to be tied into longer-term contracts given gyrations in their own supply chain, he said.
Some suppliers have been re-machining previously scrapped or discarded electrodes and selling them to mills, which were in "dire" need of material.
The shortage on electrodes for use in ladle furnaces is actually more acute than in the electric arc furnace sector, where the sticks are used for melting: China had cornered the ladle furnace electrode market in recent years, and has now curtailed production quite dramatically.
The supplier said some integrated mills were moving electrodes from plant to plant to keep running, and that some were using previously discarded material to prevent shutting down.
One large integrated mill was scouting for electrodes to prevent it shutting down; at the same time, electrode producers were hunting for coke in an increasingly tight market to ensure they have sufficient material for their own production runs.
"We have customers who have treated us relatively poorly, and we're trying to minimize our exposure to them, as is everyone else, so they have problems next year," one electrode supplier said, suggesting it was time for the electrode supply sector to try and make up some of the losses it had experienced in recent years.
The tightness in supply could stabilize into 2019 if conditions remain similar to now, sources suggest.
But China was seen as the wildcard, with another supplier saying it was a "black-box" and it was unclear how much production had exited the market and how much could return, and when.
Suppliers of electrodes surveyed by Platts in recent weeks have confirmed they will prioritize their "strategic" customers for next year, and buyers who tend to be more spot or short-term based could face issues securing tonnage.
While some material would be reserved for such buyers, they would have to compete for volume, suppliers said.
