HEG, Graphite India: Graphite electrode manufacturers' stocks jump over 13% in weak market; here is why

GrafTech’s price hike caused a positive sentiment for Indian graphite stocks, as it signals a global recovery in electrode prices, directly improving realisations and margins for Indian players.

GrafTech International is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals.

What are graphite electrodes?

Graphite electrodes are high-conductivity carbon rods used mainly in electric arc furnaces to melt scrap steel and produce new steel.

What GrafTech said

In its press release, GrafTech International said that over the past three years, market prices for graphite electrodes have declined significantly in each of its key regions and remain below sustainable levels necessary to support continued investment and reliable long-term supply for its customers.

In addition, current geopolitical developments are driving increases in its key input costs, including oil‑based raw materials, energy, and logistics.

This price increase by GrafTech represents a necessary step to restore pricing on GrafTech’s products to levels that "we expect will safeguard our regional graphite electrode production and continuity of supply for our customers".

“After a prolonged period of pricing pressure, coupled with rising input costs, a reset in graphite electrode pricing is necessary,” said Timothy Flanagan, chief executive officer and president. “While we have taken significant actions to improve our cost structure, this price increase supports reliable supply for our customers, the long-term sustainability of our operations, and the creation of shareholder value.”

How HEG and Graphite India shares are faring

At the time of writing this report, HEG shares were trading nearly 14% higher at ₹571.15 apiece on the NSE. The stock hit a high of ₹574. Graphite India shares were trading around 10.5% higher at ₹656.20 apiece on the NSE. The stock hit a high of ₹659.85.