Summary of Graphite Electrode Industry Chain Call Industry Overview - The call focused on the **Graphite Electrode**, **Needle Coke**, and **Electric Arc Furnace (EAF)** sectors, providing insights into their current status and future outlook [1] Key Insights Graphite Electrode Industry - The graphite electrode industry is perceived to be at a **cyclical bottom**, with low inventories and limited downside risk [1] - Near-term price recovery is primarily influenced by **raw material costs** rather than steel demand [1] - The **EU Carbon Border Adjustment Mechanism (CBAM)** and expansion of overseas EAFs are expected to provide a medium-term export advantage for Chinese high-power electrodes, which may help counteract weak domestic EAF performance [1] Needle Coke Market - The demand for **needle coke** is increasingly driven by **battery anode** requirements, marking a significant shift in the market dynamics [1] - Effective supply is constrained, and as import dependence decreases, profitability in the needle coke market is anticipated to rise over the next **2-3 years** [1] - The average price of needle coke in 2025 increased by approximately **RMB 1,000/ton** year-over-year, primarily due to raw material costs rather than demand [7] - The industry remains slightly unprofitable, with only low-cost inventory firms performing better [7] - Exports remained stable at **303kt**, with declines to Japan and the U.S. offset by gains in Italy, the Middle East, Southeast Asia, and Russia [7] - The 2026 outlook suggests a stable supply-demand balance, with prices still linked to costs and a modest improvement expected compared to 2025 [7] - By 2028, anode demand is projected to reach **1.6-1.8 million tons**, while electrode demand is expected to be around **0.5 million tons**, leading to total demand exceeding **2.2 million tons** [7] EAF Steel Production - EAF steel output for 2025 is projected at **105 million tons**, reflecting a **2.9% year-over-year decline**, with penetration rates at approximately **10.45%**, significantly below earlier policy expectations of **15%** [5] - The decline in coking coal and iron ore prices has restored the cost advantage of **Blast Furnace-Basic Oxygen Furnace (BF-BOF)** processes, putting pressure on EAF margins [5] - EAF operating rates are around **40%**, compared to **70%** for blast furnaces [5] - The product mix is shifting from rebar to higher-value products like **Hot-Rolled Coil (HRC)**, stainless, and specialty steels, which improves long-term quality but does not boost near-term volumes [5] - The outlook for EAF steel production indicates gradual growth from **2026 to 2028**, primarily driven by specialty steel EAFs, with no sharp policy-driven surges expected [5] Additional Important Points - The **UHP electrodes** now account for over **60%** of total production, indicating a shift towards higher performance products [5] - The decline in carbon prices from over **RMB 400/ton** to around **RMB 50/ton** has diminished the monetizable low-carbon advantage for EAFs [5] - The potential for a **seller's market** in needle coke may emerge if the growth in battery anode demand and feedstock tightness continue [7] This summary encapsulates the critical insights from the call, highlighting the current state and future expectations of the graphite electrode and needle coke industries, as well as the EAF steel production landscape.