Graphite Stocks Spark Rally as Japan Unplugs Electrode Plants

19 May, 2025

Shares of Graphite India and HEG surged significantly following reports from Nikkei Asia that Japanese graphite electrode producer Resonac has halted production at its facilities in China and Malaysia. The company's decision aims to improve its profit margins, which have been under pressure due to a flood of low-cost Chinese products. With six plants worldwide and a combined yearly capacity of 2,10,000 tons, Resonac is a significant competitor in the graphite electrode market.

Resonac will now operate from four locations in Japan, the US, Austria, and Spain after closing its operations in China and Malaysia.The move is expected to impact approximately one-third of the company’s total production capacity. This supply-side reduction is likely to create a tightening in global graphite electrode availability, which could push prices higher and improve the profitability of other players in the market.

This development has been viewed positively by investors in Indian graphite electrode manufacturers. Graphite India’s stock climbed 13.7% to ₹553.2, while HEG saw an 11% increase to ₹544.5. Despite the gains, both stocks remain about 13% below their respective 52-week highs, indicating more potential upside if market sentiment continues to improve.

The shutdown of Resonac’s Asian plants is poised to benefit Indian manufacturers by reducing competition and stabilizing or even increasing graphite electrode prices. Market analysts suggest this could mark the beginning of a positive cycle for Indian producers, especially if global supply constraints persist. The strategic exit by Resonac from China and Malaysia is thus seen as a catalyst for a potential rally in the Indian graphite sector, making HEG and Graphite India stocks to watch closely in the coming weeks.

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