Global Steel Industry Embraces EAF Technology, Boosting Demand for Graphite Electrodes and Refractories

The global steel sector is undergoing a major transformation with a strong push towards decarbonization, making Electric Arc Furnace (EAF) technology the preferred method for sustainable steelmaking. Approximately 11 million tonnes (MT) of new EAF capacity is already operational, with an additional 54 MT expected between 2025 and 2027. EAFs significantly reduce the carbon footprint compared to traditional blast furnaces. This green transition is creating a surge in demand for essential components like graphite electrodes (GE) and refractory materials, which are critical for EAF operations.

Simultaneously, the supply side for these components is tightening. Several graphite electrode plants in Western markets have closed or reduced capacity, leading to an estimated 18% decrease in global capacity (excluding China and Russia). This supply-demand imbalance sets the stage for market stabilization and a gradual recovery in prices, potentially creating a multi-year opportunity for investors.

Impact: This news is highly impactful for the industrial and materials sectors, with direct implications for companies involved in the steel supply chain and renewable energy transition. The shift towards greener steelmaking and the subsequent demand for specialized materials are critical trends. Rating: 8/10.

Difficult terms: Electric Arc Furnace (EAF): A furnace that uses electric arcs to melt scrap metal and virgin iron ore to produce steel. It is considered a more environmentally friendly method than blast furnaces. Decarbonization: The process of reducing carbon dioxide emissions, especially from industrial activities, to combat climate change. Graphite Electrodes (GE): High-purity graphite rods used in EAFs to conduct electricity and generate the high temperatures needed to melt steel. Refractory Materials: Heat-resistant materials used to line furnaces and other high-temperature industrial equipment, protecting them from extreme heat and chemical reactions. Blast Furnace: A traditional furnace used for smelting iron ore to produce pig iron, known for its high carbon emissions. Capacity Utilization: The measure of how much of a company's production capacity is being used at a given time. Year-on-Year (YoY): A comparison of financial or operational metrics from one period to the same period in the previous year. Profit After Tax (PAT): The net profit of a company after all taxes have been deducted. TPA (Tonnes Per Annum): A unit indicating the production capacity of a facility in terms of tonnes per year. IRR (Internal Rate of Return): A metric used to estimate the profitability of potential investments. FY (Fiscal Year): A 12-month accounting period that a company uses for financial reporting. Q1 FY26 (First Quarter of Fiscal Year 2026): The first three months of the fiscal year that ends in 2026. Raw Material Costs: The expenses incurred by a company to purchase the materials needed for manufacturing. Market Capitalization: The total market value of a company's outstanding shares. Greenfield Project: A project built from scratch on a new site. Joint Venture: A business agreement where two or more parties combine resources to undertake a specific project. Shotcrete Technology: A method of pneumatically applying concrete or refractory material, often used for lining or repairs.