Cost-push is the main driver, while demand recovery is only a mild supporting factor. The price strength of graphite electrodes in 2026 is essentially a “passive price increase” forced by rising upstream raw material prices, rather than an “active price increase” driven by strong downstream demand.
Cost-push: The core driver
In the production cost of graphite electrodes, raw materials such as needle coke and petroleum coke account for an extremely high proportion, with needle coke accounting for about 60% of production costs. Since 2026, prices of these raw materials have continued to climb, directly pushing up the production cost of electrodes.
Specifically, geopolitical conflicts (such as the U.S.-Iran situation) have driven up international oil prices, which in turn raised the costs of petroleum coke, needle coke, and shipping logistics. Taking low-sulfur petroleum coke as an example, its average price in March 2026 rose by 312 yuan/ton compared with February, an increase of 7.09%. At the same time, strong demand for needle coke from downstream anode materials (power batteries, energy storage) has also created competition for raw materials with graphite electrode producers, further intensifying supply tightness.
The key signal lies in corporate profits. Although electrode prices were rising, the graphite electrode industry’s profit in March fell to -2,548 yuan/ton, still deteriorating month on month. This shows that the increase in raw material costs exceeded the extent to which finished electrode prices were raised. Enterprises were “passively following the rise” under severe profit compression, and the cost-driven characteristic is very obvious.
Demand side: Marginal improvement, but limited support
There are indeed signs of recovery on the demand side, but the momentum is mild and there is clear structural divergence.
Domestic electric furnace steel operating rates rebounded after the Spring Festival, driving a wave of rigid restocking demand. In March, the average operating rate of independent electric arc furnace steel mills in China rebounded to 68.82%, providing some support for electrode demand. However, steel mills’ own profitability was not optimistic. The profit rate of 247 steel enterprises once fell to 7.79%, which severely suppressed steel mills’ willingness to accept high-priced electrodes and their purchasing intensity. Therefore, the demand-side recovery is more “restorative” than strongly expansionary.
On the export side, there was a clear drag. Affected by geopolitical conflicts in the Middle East, transportation to important export markets such as the UAE was disrupted. In the first quarter, China’s total graphite electrode exports fell by 9.62% year on year, with a sharp year-on-year drop of 33.36% in March alone. Export pressure shifted back to the domestic market, further intensifying competition in the domestic market.
Comprehensive judgment
The transmission chain behind this round of price increases is clear: geopolitical conflict/raw material tightness → sharp rise in needle coke and petroleum coke prices → substantial increase in electrode production costs → passive price increases by enterprises. Although the mild recovery on the demand side provided some bottom support, it was not enough to become the core driving force for continued price strength.
One noteworthy signal is that by October, as the supply disruptions that had previously driven raw material prices higher eased, the cost support weakened marginally, and the graphite electrode market quickly shifted into a pattern of “high-level oscillation and consolidation.” This, in turn, confirms that once the cost push weakens, demand alone is not enough to independently support prices from rising further.
Post time: Oct-14-2026