Fellars, I suspect this will backfire fer SGL....................might drive some business to GTI.................or will cause steelmakers to raise prices and demand will drop. I bet SGL sales will slow cause a this and GTI may benefit yet will it contribute to a drop in demand fer steel? I'd say so cause demand is slow now. Reckon we'll see.
SGL hikes electrode prices in bid to counter slump By Ludwig Burger and Peter Maushagen
FRANKFURT, July 23 | Tue Jul 23, 2013 5:16am EDT
(Reuters) - Germany's SGL Carbon has lifted prices for its most important product, graphite electrodes for the scrap-to-steel industry, by as much as 30 percent to counter a price slump that forced it to cut its outlook twice this year.
The head of SGL's graphite electrodes business, Klaus Unterharnscheidt, told Reuters that the unit last week informed its global customers of the mark-ups, which take immediate affect for new orders.
"In some markets, in particular in Europe and Asia, where the price war has been especially harsh, the increase would be up to 30 percent," Unterharnscheidt said, adding that this would go a long way to restore price levels last seen in April.
"It's a considerable price increase that we have to follow through and we believe that prices have bottomed out. We will not take unprofitable businesses."
SGL last month lowered its profit outlook for the second time this year, citing increased competition from Asia. The shares have lost about 26 percent so far this year
SGL is the world's biggest supplier of graphite electrodes, used in electric arc furnaces that recycle scrap metal into steel, where it competes with GrafTech of the United States as well as Japan's Tokai Carbon and Nippon Carbon.
Global graphite electrodes prices have taken a nose dive since April, as cheap Chinese blast furnace steel took global market share from electric arc furnaces outside China.
"The price slump began in April in smaller markets, but it became more severe in May and June," said SGL's Unterharnscheidt.
SGL has been 3-4 months behind GTI during this entire cycle. Any question of which company has better visibility into the graphite electrodes market should be answered, its GTI.
This price hike seems absurd. Based off my research there is simply too much supply for the market to bear a price increase like this. SGL may be signaling the other producers to raise prices, but I don't see it happening. It'll be a tough rest of the year for these guys (although GTI will make money), and I expect 2014 will be moderately better with only 2015 returning to normalization. That is assuming no recession.