There is "no evidence of reduced output" at electric arc furnace steelmakers in the US due to the global graphite electrode shortage, Phil Bell, president of the Washington-based Steel Manufacturers Association, said Thursday.
The current volatility in the electrode market, however, is being closely monitored by the SMA, Bell told S&P Global Platts.
"It's something that has been on our radar since March or April of this year," when his members -- mostly scrap-melting steel producers like Nucor, Steel Dynamics, Gerdau, Commercial Metals and others -- first noticed a dramatic uptick in electrode pricing, less supply and problems with deliveries, he said.
Bell noted that China has "taken serious steps" to curb pollution, and needle coke production was curtailed as a result. Needle coke is a key feedstock for manufacturing graphite electrodes. Hurricane Harvey also brought needle coke production to a halt at some refineries on the Gulf Coast.
That combination has shaped up as the perfect storm exacerbating the shortage. "The Chinese situation was amplified by [the] Hurricane Harvey outages," Bell said.
He discounted the contention by some in the industry that the shortage could be deliberate and that the Chinese may be sending a message about how it could retaliate if the US continues to clamp down aggressively on steel imports.
"I'd hate to speculate that it's a retaliatory event. I've heard that, but it's not an official SMA position," Bell said. "However, I would not rule anything out."
Chinese spot electrode offers have surged above $30,000/mt recently, way above contractual prices typically paid for 2017 accords; sources have estimated these were roughly around $4,000-$7,000/mt depending on supplier and client.
Through July, the US produced 48.7 million st of raw steel, according to American Iron and Steel Institute statistics, with 32.1 million st being melted in EAFs -- nearly 66% of all US output.
OPERATIONAL REMEDIES CAN HELP
Bell, whose previous experience includes working at steel mills and at SGL Carbon (an electrode maker), in fact noted there are several steps EAF operators can take to help conserve electrode consumption.
"One is to use higher voltages and lower currents to reduce wear on electrodes, this is called long-arc operation," he said. It is also vital to take care when applying electrodes to prevent socket breaks, cracking and other mishaps, Bell said.
"It's also important to pay close attention to the scrap mix," Bell added. Since the electrodes are the workhorses that melt the cold scrap. "You want a scrap mix that reduces oxidation, which in turn will help prevent electrodes from breaking," he said.
Earlier Thursday, graphite electrode producer GrafTech International declared force majeure following disruption to its needle coke supply, a steelmaking executive, who wished to remain anonymous, told Platts.
GrafTech, the largest graphite electrode producer in the world pending the merger of SGL Carbon and Showa Denko, could not be reached for comment.
