The widespread adoption of electric arc furnace (EAF) steelmaking is set to continuously drive the growth in demand for graphite electrodes, with core driving factors stemming from the synergy of policy guidance, technological advancements, and market demand. The specific analysis is as follows:
I. Policy-Driven Mandates: Increased Share of EAF Steelmaking Directly Expands the Demand Base for Graphite Electrodes
1. China’s Capacity Replacement Policy Under the “Dual Carbon” Goals
China plans to raise the proportion of EAF steelmaking from the current 10% to 15%-20% by 2025, a policy that will directly boost demand for graphite electrodes. For instance, with a projected demand for graphite electrodes in EAF steelmaking reaching 860,000 tons in 2025, representing a year-on-year increase of approximately 10%, the demand increment will further expand if the proportion rises to 20%.
2. Global Steel Demand Rebound and Environmental Pressures
Global steel demand is expected to rebound by 1.2% to 1.772 billion tons in 2025. Coupled with international environmental standards such as the EU’s carbon border adjustment mechanism (CBAM), traditional blast furnace steelmaking (with 60%-70% higher carbon emissions than EAFs) faces increasing pressure for phase-out, making the widespread adoption of EAF steelmaking a global trend.
II. Technological Advancements: Ultra-High Power Graphite Electrodes as the Core Material for EAF Efficiency Enhancement
1. Stringent Performance Requirements for Graphite Electrodes in EAF Processes
Ultra-high power (UHP) graphite electrodes, characterized by low resistivity (≤6 μΩ·m) and high flexural strength (≥15 MPa), are pivotal for enhancing EAF efficiency. As arc power increases, smelting processes demand graphite electrodes with superior oxidation resistance and thermal shock resistance, driving growth in demand for high-end products.
2. Increased Market Concentration in High-End Products
By 2025, the price of UHP electrodes is expected to exceed RMB 18,000 per ton, with their market share increasing to over 60% of total demand. Leading companies (e.g., Fangda Carbon and Graftech) have secured a dominant position in the high-end market through technological monopolies, while small and medium-sized enterprises (SMEs) are exiting due to environmental and cost pressures, leading to increased industry concentration among top players.
III. Market Demand Drivers: Rigid Consumption in EAF Steelmaking and Expansion into Emerging Sectors
1. Rigid Consumption Characteristics of EAF Steelmaking
EAF steelmaking consumes approximately 1.5-2.5 kg of graphite electrodes per ton of steel, demonstrating significant demand rigidity. Although tonnage consumption has decreased from 3.5 kg to 1.2 kg due to the large-scale adoption of EAFs (e.g.,粗炼 electric arc furnaces above 100T) and smelting process optimization, overall demand continues to grow with capacity expansion.
2. Incremental Demand from Emerging Sectors
- New Energy Sector: The production of lithium-ion battery anode materials relies on graphite products. Global anode material output is projected to reach 2.625 million tons in 2025, with China accounting for over 98%, driving demand for graphite electrode graphitization processing.
- Semiconductor Sector: High-precision graphite electrodes are used in crystal growth furnaces and etching equipment, requiring a purity level above 99.999%. The growing demand for 5G and AI chips is driving an annual demand growth rate exceeding 15%.
- Industrial Silicon and Yellow Phosphorus Production: The chemical industry demands electrodes with high stability and durability, where graphite electrodes dominate.
IV. Industry Challenges and Responses: Structural Adjustments Amid Cost Pressures and Environmental Constraints
1. Soaring Raw Material Costs
In early 2025, needle coke prices surged by RMB 5,500 per ton within half a month to RMB 32,000 per ton, while low-sulfur petroleum coke prices exceeded RMB 7,300 per ton, marking a 57% year-on-year increase. Companies are mitigating costs by developing in-house needle coke production capabilities (e.g., through vertical integration), highlighting the competitive advantage of leading enterprises.
2. Environmental Policies Driving Capacity Upgrades
Environmental restrictions in regions like Hebei and Henan have led to periodic supply tightness, while the high energy consumption of graphitization processes limits capacity expansion. Companies must establish a closed-loop “production-recovery-regeneration” system to comply with international environmental standards such as the EU CBAM.
Conclusion: EAF Steelmaking Adoption as the Core Engine for Graphite Electrode Demand Growth
Driven by the combined forces of policy mandates, technological advancements, and market demand, the widespread adoption of EAF steelmaking will continue to propel growth in graphite electrode demand. Despite challenges such as soaring raw material costs and environmental constraints, the industry is consolidating demand growth logic through high-endization (e.g., UHP electrodes), intelligence (e.g., digital twin technologies), and green transitions (e.g., closed-loop systems). Looking ahead, leading enterprises with technological reserves and vertical integration capabilities will dominate the market landscape, while cross-sector collaborations (e.g., synergistic R&D between graphene batteries and electrodes) may serve as key breakthroughs for overcoming growth bottlenecks.
Post time: Aug-20-2025