Jul. 01, 2024
Time to Reassess the entire GE Story .
What Goes up comes down !! Its an age old saying and quite apt looking at the current fall in price of GE stocks. But why such a fall ?
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In my view the key highlights over the last three months
Increase in Supply of Needle Coke as per Heg Mgmt in the Conf calls. One of the key reasons for the rise in price realization for GE was the limited supply of NC. As the supply is increasing and hence this means GE producers can produce more either through higher Utilization or Brown Field Capacities
Expansion Plans underway :
Heg Mgmt announced a plan to add 20K capacity, while the news was going around for almost a
year or so but this time it came with a concrete plan. As per the Mgmt , they will go ahead with
expansion only post they had confidence of NC supply
News of Big time China expansion in GE - As per the recent news and also from Grafftech Conf, there are news that this is going to happen sooner than expected. China is a black hole but it controls the entire GE market , no matter what people say about UHP production etc
Additional Supply from Other Big Players - If we analyse the last qtr supply of GE from big players like Grafftech, Showa Denko etc each of them has produced higher numbers . It also means that NC supply is improiving
Heg Buyback - This was the last nail in the coffin, why would anyone like to buyback 2% - 3% at /. They could have easily bought the stock from the Market at odd or so ( Tentative price at the time of announcement) . If we look at level 2 thinking, something looks fishy here
International GE Stock Prices - To me Grafftech prices movement told us that Market knew something that we don't. Grfftech almost halved in a months time , now stocks dont go down so much only on rumours
To sum it, the risk-reward ratio is not in favour of Investors anymore. At best, we may see another 20% rise in stock prices from here due to Q3 numbers . But again I do not see GE prices at USD/tonne anymore . It may not come down to Usd but it may be a slow downward slide for sometime after which it comes down drastically.
I would be happy to leave the 20% to the Markets and be better safe than sorry.
As we say , best time to buy a commodity stock is at High PE and best to exit is at Low PE . In my view this is lowest TTM PE that GEs will have.
Disclaimer : Have exited all my GE positions over the last month or so. Views may be biased so pls make your own opinion.
The price of UHP graphite electrodes is not static and is influenced by several key factors:
The primary raw materials for graphite electrodes are petroleum coke and needle coke. Fluctuations in the prices of these materials directly affect the cost of the electrodes. Factors such as crude oil prices, refinery production rates, and the availability of high-quality coke can cause significant price variations.
The production of UHP
involves multiple stages, including mixing, molding, baking, impregnation, and graphitization. Each stage requires specialized equipment and energy, contributing to the overall cost. The quality and yield of the electrodes also depend on stringent manufacturing controls.
The demand for graphite electrodes is closely tied to the steel industry. An increase in steel production drives up the demand for electrodes, leading to higher prices. Conversely, a slowdown in steel production can result in reduced demand and lower prices. Seasonal variations and global economic conditions also play a role.
International trade policies, including tariffs and quotas, can impact the price of graphite electrodes. Countries that rely on imports may face higher prices due to these trade barriers. Conversely, favorable trade agreements can reduce costs.
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Advancements in production technology can influence costs. Innovations that improve efficiency and yield can lower production costs, while the adoption of new, expensive technologies may increase prices temporarily.
As of mid-, the market price for UHP graphite electrodes typically ranges from $3,000 to $8,000 per ton. This price range reflects the various influencing factors mentioned above. Here are some current trends:
A rise in steel production, particularly in developing countries, has led to higher demand for graphite electrodes.
Global supply chain issues, including shipping delays and raw material shortages, have contributed to price volatility.
Stricter environmental regulations on carbon emissions and waste management in the graphite electrode manufacturing process can increase production costs.
To navigate the complexities of purchasing
, consider the following strategies:
Compare quotes from different suppliers to get the best price and terms. Look for suppliers with a track record of reliability and quality.
Ensure that the electrodes meet industry standards such as ISO and ASTM specifications. High-quality electrodes offer better performance and longer service life.
If your operations require a steady supply of electrodes, negotiate long-term contracts to lock in prices and ensure supply stability.
Stay informed about market conditions, including raw material prices and industry demand, to make informed purchasing decisions.
Conclusion
The price of UHP graphite electrodes is influenced by a complex interplay of raw material costs, manufacturing processes, supply and demand dynamics, trade policies, and technological advancements. By understanding these factors and staying informed about market trends, industries can make strategic procurement decisions that optimize costs and ensure operational efficiency.
Suggested reading:
Time to Reassess the entire GE Story .
What Goes up comes down !! Its an age old saying and quite apt looking at the current fall in price of GE stocks. But why such a fall ?
In my view the key highlights over the last three months
Increase in Supply of Needle Coke as per Heg Mgmt in the Conf calls. One of the key reasons for the rise in price realization for GE was the limited supply of NC. As the supply is increasing and hence this means GE producers can produce more either through higher Utilization or Brown Field Capacities
Expansion Plans underway :
Heg Mgmt announced a plan to add 20K capacity, while the news was going around for almost a
year or so but this time it came with a concrete plan. As per the Mgmt , they will go ahead with
expansion only post they had confidence of NC supply
News of Big time China expansion in GE - As per the recent news and also from Grafftech Conf, there are news that this is going to happen sooner than expected. China is a black hole but it controls the entire GE market , no matter what people say about UHP production etc
Additional Supply from Other Big Players - If we analyse the last qtr supply of GE from big players like Grafftech, Showa Denko etc each of them has produced higher numbers . It also means that NC supply is improiving
Heg Buyback - This was the last nail in the coffin, why would anyone like to buyback 2% - 3% at /. They could have easily bought the stock from the Market at odd or so ( Tentative price at the time of announcement) . If we look at level 2 thinking, something looks fishy here
International GE Stock Prices - To me Grafftech prices movement told us that Market knew something that we don't. Grfftech almost halved in a months time , now stocks dont go down so much only on rumours
To sum it, the risk-reward ratio is not in favour of Investors anymore. At best, we may see another 20% rise in stock prices from here due to Q3 numbers . But again I do not see GE prices at USD/tonne anymore . It may not come down to Usd but it may be a slow downward slide for sometime after which it comes down drastically.
I would be happy to leave the 20% to the Markets and be better safe than sorry.
As we say , best time to buy a commodity stock is at High PE and best to exit is at Low PE . In my view this is lowest TTM PE that GEs will have.
Disclaimer : Have exited all my GE positions over the last month or so. Views may be biased so pls make your own opinion.
The price of UHP graphite electrodes is not static and is influenced by several key factors:
The primary raw materials for graphite electrodes are petroleum coke and needle coke. Fluctuations in the prices of these materials directly affect the cost of the electrodes. Factors such as crude oil prices, refinery production rates, and the availability of high-quality coke can cause significant price variations.
The production of UHP
involves multiple stages, including mixing, molding, baking, impregnation, and graphitization. Each stage requires specialized equipment and energy, contributing to the overall cost. The quality and yield of the electrodes also depend on stringent manufacturing controls.
The demand for graphite electrodes is closely tied to the steel industry. An increase in steel production drives up the demand for electrodes, leading to higher prices. Conversely, a slowdown in steel production can result in reduced demand and lower prices. Seasonal variations and global economic conditions also play a role.
International trade policies, including tariffs and quotas, can impact the price of graphite electrodes. Countries that rely on imports may face higher prices due to these trade barriers. Conversely, favorable trade agreements can reduce costs.
Advancements in production technology can influence costs. Innovations that improve efficiency and yield can lower production costs, while the adoption of new, expensive technologies may increase prices temporarily.
As of mid-, the market price for UHP graphite electrodes typically ranges from $3,000 to $8,000 per ton. This price range reflects the various influencing factors mentioned above. Here are some current trends:
A rise in steel production, particularly in developing countries, has led to higher demand for graphite electrodes.
Global supply chain issues, including shipping delays and raw material shortages, have contributed to price volatility.
Stricter environmental regulations on carbon emissions and waste management in the graphite electrode manufacturing process can increase production costs.
To navigate the complexities of purchasing
, consider the following strategies:
Compare quotes from different suppliers to get the best price and terms. Look for suppliers with a track record of reliability and quality.
Ensure that the electrodes meet industry standards such as ISO and ASTM specifications. High-quality electrodes offer better performance and longer service life.
If your operations require a steady supply of electrodes, negotiate long-term contracts to lock in prices and ensure supply stability.
Stay informed about market conditions, including raw material prices and industry demand, to make informed purchasing decisions.
Conclusion
The price of UHP graphite electrodes is influenced by a complex interplay of raw material costs, manufacturing processes, supply and demand dynamics, trade policies, and technological advancements. By understanding these factors and staying informed about market trends, industries can make strategic procurement decisions that optimize costs and ensure operational efficiency.
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