HEG Q3 FY24 concall Highlights
No growth in steel production worldwide
a. US is flat
b. EU has degrown by 7%
c. CN has subdued demand + excess inventory has been exported
d. currently electric arc furnace - upcoming capacity of 90 million tons, by 2025 40 Million tons of additional capacity will come online. Rest post 2025. Decarbonization of steel is a one way process.
Though margin pressure is going on, HEG has operated at 85% capacity for last 9 months on the 80000 ton capacity plant
Margin looks bad due to delay in passing price drop in needle coke. Usually takes at least a quarter. However margin pressure will remain subdued for the next 3 quarters
There is no inventory overhang and it is at stable level. So risk of an inventory right off is relatively low as per management.
HEG has the highest utilization in the electrode space~ 85%
getting subsidy on electricity from MP at a discount of 50 paisa. They expect the power cost to remain at 5.5 rupees per unit but this can go down to 4 as they are also looking out to buy renewables.
TACC - Construction has started and will get operational by June / July 2023
the major step is the process of making anode powder where HEG has experience from past . They will use the old furnaces to graphitize.
the next of the steps to create anode powder is mostly done by machines
TACC has been procuring 10 ton per month and evaluation with customers . They can see 50-60 GWh capacity being materialized in India.
competition (himadri etc. ) has not announced any capex in anode powder space.
they have indicated that they have the necessary expertise to produce anode powder. ( Which seems legit from my point of view )
Competition
industry is going through a lot of pain HEG is holding up
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Graftec has shut down 25000 ton capacity and has been reporting losses - https://ir.graftech.com/investors/news/news-details/2024/GrafTech-Reports-Fourth-Quarter-and-Full-Year-2023-Results/default.aspx
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Graphite India numbers are very poor and have been writing off inventory
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