Graphite India shares soar over 16%, HEG jumps 11% today; here is why

HEG Limited and Graphite India shares soared on Monday, May 19, after reports suggested that Japan's Resonac Holdings will quit production in China and Malaysia following margin pressure.

Resonac is a major producer of graphite electrodes, which are used mainly in electric arc furnaces to melt scrap iron. The product used by steelmakers is less profitable due to Chinese competition.

Graphite electrodes are used mainly in electric arc furnaces, which melt scrap iron using heat from an electrical current.

The company will liquidate its subsidiaries in China and Malaysia, leaving it with four sites in Japan, the US, Austria and Spain, the report further stated.

Following this development, shares of Indian graphite electrode producers like Graphite India and HEG surged during the intraday period on Monday.

Electrodes and refractories firm HEG shares were trading 11.03% higher at ₹544.7 apiece, while Graphite India stocks were seen at ₹565.2 per share, jumping 16.2%.

HEG has one of the largest integrated graphite electrode plants in the world and exports over 70% of its production to more than 30 countries of the world.

Last week, Graphite India recorded a net profit of ₹50 crore for the March quarter of the financial year 2024-25 as compared to ₹16 crore in the same quarter last fiscal. Its total income for Q4 FY25 was ₹723 crore as against ₹792 crore in Q4 FY24.

For FY25, Graphite India has reported total income of ₹2,998 crore in contrast to ₹3,254 crore in FY24.

“Graphite electrode prices remain under pressure, while raw material costs, particularly petroleum needle coke, have not declined in tandem, leading to an impact on operating margins. Given the company’s diversified export portfolio across multiple geographies, the impact of any US tariffs on our financial performance is limited,” K K Bangur, Chairman of Graphite India, had said.

“The outlook for graphite electrodes remains positive with the medium-term move towards EAF-based production, which supports lower carbon emissions and greater operational flexibility. As of 2023, EAFs accounted for 28% of global steel production, with this projected to increase to 41% by 2030,” he had further said.

Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally by total capacity. Its manufacturing capacity of 98,000 tonnes per annum is spread over three plants at Durgapur and Nashik in India and Nurnberg in Germany.

HEG Limited is slated to announce its March quarter earnings on May 19.