THE country’s carbon industry will face severe overcapacity from the second half of 2020, after producers rushed to expand capacity amid fat profit margins, an official from the China Carbon Industry Association (CCIA) said Saturday.

Carbon products are widely used in sectors such as metallurgy, chemicals, and aviation due to their strong resistance to corrosion and good conductivity.

“Extravagant profits have lured companies that shut down in bleak years to resume operations and even expand capacity,” said Sun Qing, the CCIA’s general secretary. “Meanwhile, some that don’t have carbon capacity are planning to launch new production lines.”

The nationwide environmental protection campaign has tightened supplies of carbon products, but has also boosted demand for products such as graphite electrodes used to melt scrap in electric arc furnaces (EAF).

EAFs emit less toxic air compared to other steelmaking equipment.

Net profits at Fangda Carbon New Material, China’s biggest producers of graphite electrodes, surged 5,267.7 percent in 2017 from the year before to 3.6 billion yuan (US$521 million), while average profit margins in the Chinese carbon industry last year jumped more than 3,000 percent, according to CCIA data.

China is expected to have graphite electrode capacity totalling 1.5 million tons by 2020, up 66.7 percent from 900,000 tons in 2017, said Sun. That will exceed demand of less than 800,000 tons in 2020, he added.

Prebaked anode, a raw material used at aluminum smelters, will also see a glut in supply, with redundant capacity set to reach 9 million tons in 2018, before climbing more in the coming three years, Sun said.(SD-Agencies)