Expect strong demand to continue for some time; capacity utilisation at 85%: HEG

The HEG stock has been under pressure of late on concerns surrounding sustainability of graphite electrode demand and higher prices.

However, Ravi Jhunjhunwala, Chairman & MD, HEG is upbeat on strong demand for graphite electrodes on back of continuation of its shortage for some more time. Therefore, prices are also expected to remain strong, he said.

China which earlier produced about 6-7 percent of steel through electric arc furnace and post its environmental policies it has gone to 8.5-9 percent and by end of this year they could be in the range of 10 percent, said Jhunjhunwala. One must also remember that China produces more than 50 percent of world's steel, he added.

He confirmed that the graphite electrode prices over the last one year have gone up from around USD 2500 per tonne to USD 10,000 per tonne. However, he declined to comment on the exact graphite electrode prices.

The company currently is running at 85 percent capacity utilisation, said Jhunjhunwala.

He said, normally they enter into contracts that span between 3-6 months for supplying electrodes because their main raw material is imported.