Graphite end market focus: Q3 2014

By Andrew Miller
Published: Friday, 18 July 2014

Downloadable: IM Data analyses the recent developments in the refractories market

Accounting for almost 40% of total consumption, the refractories market is still the driving force behind natural graphite demand. While the decline in steel production outside of China has seen this demand stutter, industrial growth forecasts suggest 2014 could represent a turning point for graphite’s leading end-market

Steel growth stutters

With growth in steel production slowing, particularly within China, demand for magnesia-carbon refractory products has been restricted over H1 2014.
Despite crude steel production increasing by 3.8% year-on-year (y-o-y) in Q1 2014, refractories producers are yet to report an upturn in demand significant enough to provoke price increases in upstream mineral markets.

Furthermore, as excess steel capacities limit profit margins for producers, refractory mineral prices have suffered from demand-side pressures.
While the market looks unlikely to experience a major recovery over H2 2014, steady growth in steel production outside of China looks set to drive demand for refractory products approaching the new year.

China’s refractory revolution

As China has cemented its position as the leading steel producer in the world over the past decade, the need for greater efficiency in upstream markets has steadily grown in importance.
Today, the Chinese refractories market has output of close to 30m tpa, however this production is spread across around 2,500 plants.

The country’s aim of increasing refractory usage efficiency by 2020 has required these plants to improve the quality of their output and subsequently sparked industry consolidation.
With Chinese producers slowly moving towards production of higher quality refractories, demand for raw materials is likely to cause a tightening in supply in many refractory mineral markets.
In the flake graphite market, the question has become how this transformation will coincide with upcoming demand from emerging markets.

Demand distribution

Slowing steel production growth in China has been met by a recovery in production elsewhere in the world, which is likely to drive greater refractory demand in these regions.
Steel markets in Europe and North America are exhibiting steady production growth, while output from the Middle East is set to replace China as the hub of rapid expansion.

The upshot for the refractories industry will be a divergence in consumption patterns, with greater sales expected into developing regions outside of Asia.

This, in turn, will see greater demand for graphite in these areas, which considering China’s consolidation plans will increase the need for new capacities elsewhere.

To download IM Data’s Quarterly outlook for the graphite market, please click here.

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