Graphite electrode is a key component for electric arc furnaces (EAFs) that turn scrap into steel.
Global slowdown in steel demand coupled with increased steel exports from China is expected to impact demand of electrodes. China is expected to have graphite electrode capacity totaling 1.5 million tonnes by 2020, up 66.7 per cent from 0.9 million tonnes in 2017 to support newly installed EAF capacities.
“China could play the proverbial spoil sport. They have installed and commissioned new needle coke and graphite electrode capacity. If they do not shore up their Arc Furnace steel capacity to absorb these additional volumes, the resultant excess could dampen the prospects of the graphite electrode market,” HEG said in 2019 annual report.
Thus far in the calendar year 2019, the market price of HEG tanked 75 per cent from level of Rs 3,720, as against a 3 per cent rise in the S&P BSE Sensex.
At 11:10 am, the stock was trading 5 per cent lower at Rs 958 on the BSE, as compared to a 0.16 per cent decline in the benchmark index. A combined 4,57,441 shares have changed hands on the BSE and NSE so far.