* Hikes electrode prices in Europe, Asia by up to 30 pct
* Sees no marked effect on profit before next year
* Slump in prices has led to two profit warnings this yr
* Shares gain 0.9 pct on the news
By Ludwig Burger and Peter Maushagen
FRANKFURT, July 23 (Reuters) - Germany’s SGL Carbon has lifted prices for its most important product, graphite electrodes for the scrap metal industry, by as much as 30 percent to counter a price slump that forced it to cut its outlook twice this year.
SGL is the world’s biggest supplier of the electrodes, used in electric arc furnaces that recycle scrap into steel, competing with GrafTech of the United States as well as Japan’s Tokai Carbon and Nippon Carbon.
But those developed world companies have suffered this year from cheap Chinese steel made from fresh iron ore, which has taken more of the global market from the recycled metal the arc furnaces produce.
The head of SGL’s graphite electrodes business, Klaus Unterharnscheidt, told Reuters that he believed prices were ready to bottom out and had informed global customers last week of the mark-ups, which take immediate affect for new orders.
“In some markets, in particular in Europe and Asia, where the price war has been especially harsh, the increase would be up to 30 percent,” Unterharnscheidt said, adding that this would go a long way to restore price levels last seen in April.
The company’s shares, trading little changed before the news, gained 0.9 percent by 0927 GMT.
SGL last month lowered its profit outlook for the second time this year, citing the increased competition from Asia and has seen its shares fall about 26 percent in 2013.
Chinese steel last year accounted for 46 percent of annual global output of 1.55 billion tonnes, but only about 10 percent of the nation’s production comes from melting scrap metal. By contrast, some 40 percent of the steel made in the rest of the world comes from recycled material.
SGL, which also makes carbon fibres for wind turbine rotor blades and car parts, does not expect the price hike to have a marked effect on earnings before 2014 as most of the orders SGL plans to fill in the remainder of the year were agreed under the previous prices.
Chinese authorities have helped steel plants, many of which are state-owned, to maintain strong growth in recent years in an effort to keep employment high and avoid social unrest even amid overproduction and weaker prices.
SGL, which derives almost half of its sales from graphite electrodes, said tariffs levied by other steel producing nations against Chinese steel exports could soon shore up the portion of global steel coming from recycling. That would translate into higher demand for graphite electrodes for electric arc furnaces.
Unterharnscheidt also said SGL is ready to pay for the price hikes with some loss of market share for a while.
“We are the biggest supplier and certainly want to defend our market share in the medium term. But certain swings in market share have to be accepted,” said Unterharnscheidt.