Graphite Electrode Market

Market Overview

The global graphite electrode market size was valued at USD 9.22 billion in 2022. It is estimated to reach USD 13.58 billion by 2031, growing at a CAGR of 4.40% during the forecast period (2023–2031). The global graphite electrode market is being driven by the growing usage of batteries in various applications, which are known to improve battery performance when combined with graphite electrodes. A shift towards electric arc furnaces from conventional blast furnaces owing to their advantages is expected to boost market growth.

Large, cylindrical graphite electrodes are typically manufactured with coal tar pitch, premium petroleum needle coke, and some additives. They transform electrical energy from the power source into heat for melting scrap metal. As a result of graphite's high thermal conductivity and low electrical resistance, these electrodes can produce heat as hot as 1,600 degrees Celsius. Graphite Electrode is primarily utilized in Electric Arc Furnaces (EAF) and Blast Oxygen Furnaces (BOF) to produce steel and melt ferrous alloys. These electrodes produce high-quality goods with high electrical conductivity, withstand high heat dissipation, and exhibit exceptional mechanical strength.

Market Dynamics

Global Graphite Electrode Market Drivers

Rising Demand to Enhance Battery Performance

The graphite electrode market is driven by the demand for graphite in numerous applications, lithium-ion batteries being one of the most significant. Lithium-ion batteries are extensively utilized in electric vehicles (EVs), portable electronics, and renewable energy storage systems. Therefore, advancements or enhancements in lithium-ion battery technology have the potential to significantly impact the graphite electrode industry.

In this context, substituting 15% of graphite with Ionisil in a water-based CMC/SBR binder system yields electrodes with a stable capacity of 740 mAh/g greater than three times that of a pure graphite anode. This increased capacity significantly improves the performance of lithium-ion batteries, allowing for longer battery life and greater energy storage capabilities. Thus, the trend mentioned above drives the expansion of the global graphite electrode market.

Growing Preference for EAF (Electric Arc Furnaces)

EAFs have become a popular alternative to conventional blast furnaces due to their energy efficiency, adaptability, and reduced environmental impact. EAFs are ideal for the production of specialty steels and the recycling of scrap metal. Consequently, the global adoption of EAFs has increased significantly. This increase in EAF steel production has directly increased the demand for graphite electrodes, essential to the EAF steelmaking process. For instance, India has been concentrating on increasing its steel production capacity and has set an ambitious goal of 300 million tons by 2030. India is actively adopting EAF technology to achieve this objective, significantly increasing demand for graphite electrodes.

Global Graphite Electrode Market Restraints

Soaring Prices of Needle Coke

Needle coke is a specialty-grade petroleum coke with good quality for making electrodes. Needle coke is a primary material for graphite electrodes in an electric furnace. Coal-based needle coke is produced from coal tar, and compared to petroleum-based needle coke, they have excellent physical properties such as low coefficient of thermal expansion and low electric resistance, along with less spalling and less breakage.

China is a major graphite electrode-producing and exporting country, and its price trends affect global graphite electrode prices. Prices for high-power and ultra-high-power electrodes were high in 2021 because of the higher prices of needle coke. Uncertainty in crude oil prices has led to price volatility of needle coke as it is a derivative of crude oil. Such high price trends of needle coke are acting as a restraint to the graphite electrode market.

Global Graphite Electrode Market Opportunities

Rising Availability of Steel Scrap in China

Approximately 40% of the world's steel production is derived from recycled steel scrap. The employment of steel scrap results in a reduction of carbon dioxide (CO2) emissions by 58%. Scrap consumption in China is increasing rapidly, owing to the shutdown of sub-standard steel capacities after realizing the hazardous effects of carbon dioxide emissions caused by induction furnaces. This movement has helped China shift toward the surging use of electric arc furnaces (EAF) for steel production. According to official figures, the country imported 552,892 tons of steel scrap in 2021, an increase of 1,938% from 2020.

China is expected to increase its steel scrap usage by 23% to 320 million tons by 2025 to meet its climate commitments. With China rapidly trying to increase its steel production through EAFs, which require graphite electrodes, the market for graphite electrodes is expected to rise in the country in the coming years. Using EAF would promote steel scrap over virgin ore. The increase in EAF production is projected to increase steel scrap usage in the country and is likely to generate tremendous opportunities for the growth of the graphite electrode market.

Regional Analysis

Based on region, the global graphite electrode market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia Pacific Dominates the Global Market

Asia-Pacific is the most significant global graphite electrode market shareholder and is expected to grow substantially during the forecast period. The development in the Asia-Pacific region can be attributed to the expanding steel industries in China and India. Graphite electrodes are a crucial component of the steel manufacturing process. They are the primary heat source in electric arc furnaces to smelt waste metal and create new steel. Rapid infrastructure growth in these nations increases the steel demand, ultimately fueling market growth over the forecast period. For instance, according to secondary research, China allocated RMB 3.65 trillion (USD 573 billion) in SPBs to local administrations in 2021, of which 97% had been issued by December 15, 2021. In addition, the Asia-Pacific region is anticipated to experience tremendous development over the forecast period due to the increasing investments of regional industry players. For instance, in October 2021, JSW Steel invested INR 150 billion to construct a steel plant in Jammu and Kashmir and fuel manufacturing in the region. Thus, the factors above support market expansion over the forecast period.

North America is predicted to expand significantly over the forecast period. North America, particularly the United States, has a well-developed manufacturing infrastructure, which supports the development of the graphite electrode market. The region has sophisticated manufacturing facilities, knowledge, and technologies for producing graphite electrodes. These established capabilities enable North American manufacturers to efficiently produce high-quality graphite electrodes for industries like steel, aluminum, and electric vehicles. In addition, the regional expansion is a result of rising steel production. In 2017, the American iron and steel industry contributed over USD 520 billion in revenue and nearly two million jobs to the U.S. economy, according to an estimate. These employees earned nearly USD 130 billion in compensation and benefits. The total federal, state, and local taxes collected by the sector was USD 56 billion. A robust manufacturing infrastructure fosters competitiveness, innovation, and efficiency in the production process. It also enables manufacturers to meet domestic demand and expand export capacities, contributing to market expansion.

Europe is anticipated to experience tremendous global growth over the next few years. The presence of developed nations like Germany and the U.K. is expected to boost regional market growth. Germany is one of the top ten producers of steel in the world. In March 2021, the crude steel output from its mills was 3.8 million tons, an increase of 14.8% yearly. In 2021, the country produced 40.1 MMT of crude steel, up 12.3% from 35.7 MMT in 2020. From January to March 2021, steel production increased to 10.2 million tons, up by 3.2% compared to the same period in 2020. Such trends are likely to expedite the growth of the market. Similarly, the key participants in the region are involved in partnerships, mergers, and acquisitions to strengthen their market position. For instance, in March 2020, Jingye Group, a leading Chinese steelmaker, completed the acquisition of British Steel's U.K. assets. Jingye Group has pledged to invest GBP 1.2 billion to make British Steel more competitive and sustainable. These factors propel the regional market growth.

In South America, Brazil is one of the largest manufacturers and suppliers of Graphite electrodes. Global steel production has increased due to high consumer demand and other end-use industries. According to the local steel institute Aço Brasil, in September 2021, the Brazilian production of crude steel was 3.1 million tons, an increase of 15.3% compared to the same month in 2020. The Brazilian production of crude steel was 27.2 million tons in the first nine months of 2021, which represents a surge of 20.2% compared to the same period in 2020. Similarly, the production of rolled products in the same period was 20.1 million tons, an increase of 28.7% compared to the same period in 2020. Thus, it is likely to support the market over the forecast period.

Segmental Analysis

The global graphite electrode market is segmented by electrode grade and application.

Based on electrode grade, the global graphite electrode market is bifurcated into ultra-high power (UHP), high power (SHP), and regular power (RP) electrodes. 

The ultra-high power (UHP) electrode segment dominates the global market and is expected to expand substantially over the forecast period. Ultra-high-power graphite electrodes are manufactured for operation at currents with a density of more than 25A/cm2, and the graphite electrode UHP is mainly used for ultra-high-power arc furnaces and powerful ladle furnaces. UHP-grade electrodes are manufactured primarily from petroleum needle coke (PNC). PNC is a carbon-rich solid material derived from cracking petroleum in a complex refinery. The cracking process splits long chains of hydrocarbons into shorter chains. It is accomplished by taking residual oils from the refining process and treating them at high temperatures (above 8000C and pressure).

The global UHP grade electrode production is now running at 100% capacity, and many players are also looking to expand their production abilities. The tier-2 players in the UHP graphite electrodes market witness much of the production increase. The supply/demand imbalance, combined with the need to secure supplies of petroleum needle coke, has resulted in the average cost per metric ton (MT) of UHP grade electrodes rising from USD 4,100 between 2010 and 2019 to well over USD 11,000.

High-power (SHP) graphite electrodes adopt quality petroleum coke or low-grade needle coke as raw material. Its physical and mechanical characteristics are higher than RP graphite electrodes, such as lower electrical resistance and a greater current density. SHP has higher resistivity and coefficient of thermal expansion (CTE) than UHP electrodes. The production process of SHP graphite electrodes includes crushing, screening, dosing, kneading, forming, baking, high-pressure impregnation, the second time of baking, graphitization, and machining refining. In contrast, SHP nipple uses needle coke, three times impregnation, and four times baking processes. In addition, the demand for electrodes with a larger diameter has increased as EAF furnace sizes have grown. Graphite electrodes with 500 mm or 600 mm diameters have recently gained popularity. Similarly, the SHP electrode is widely used in electric furnaces as a conductive electrode in steel melting. Hence, due to the factors above, the demand for high-power electrodes is expected to increase in the forecast period.

Based on application, the global graphite electrode market is segmented into electric arc furnaces, basic oxygen furnaces, and non-steel applications. 

The electric arc furnace segment owns the highest market share and is expected to expand significantly during the forecast period. Steel is produced by melting steel scrap, DRI (direct reduced iron), HBI (hot briquette iron, which is compressed DRI), or pig iron in solid form in an electric arc furnace (EAF).A graphite electrode is utilized to melt steel scrap in the electric arc furnace (EAF) steelmaking procedure. Graphite is used to construct electrodes due to its ability to tolerate high temperatures. In EAF, the electrode tip can reach a temperature of 3,000 degrees Fahrenheit, equivalent to 50 percent of the sun's surface temperature. The diameter and length of electrodes range from 75 mm to 750 mm and up to 2,800 mm, respectively. Currently, EAF steel accounts for approximately 10% of the total market share in China. However, the situation is expected to change due to the increasing availability of steel scrap in the country and government policies encouraging its utilization. As a result of the factors above, demand for graphite electrodes used in EAF applications is anticipated to increase steadily over the forecast period.

The basic oxygen furnace is a vessel steelmakers use to convert liquid iron into steel by burning out most of the remaining carbon, silicon, and other impurities present in iron at about 6% but less than 1% in steel. The process that occurs in the BOF is called basic oxygen steelmaking. The word refers to the presence of fluxes of lime or dolomite, which maintain an alkali pH balance or chemically "base" condition in the furnace. However, basic oxygen furnace (BOF) production utilizes graphite electrodes but only to maintain the virgin steel in a molten state. As such, electrodes are not as large, nor do they require the high level of specification that EAF electrodes require. Electrodes used in BOF operations are commonly referred to as ladle electrodes.

Recent Developments

• April 2023- GrafTech International Ltd., a leading manufacturer of graphite electrode products essential to the manufacturing of electric arc furnace steel, announced the opening of a new sales office in Dubai, United Arab Emirates.
• July 2023- Enevate, a U.S.-based innovator of battery technologies for electric vehicles (EVs) and other markets, and JR Energy Solution (JR ES), a leader in the design of high-performance lithium-ion battery electrodes and cells, announced a joint plan to construct a battery cell electrode manufacturing facility in the U.S.