Shares of graphite electrode makers HEG Ltd and Graphite India were firmly in focus in the final trading session of 2025, buoyed by expectations around Europe’s carbon border rules and their implications for low-carbon steelmaking.
On Thursday, shares of Graphite India were trading up around 10%, while HEG Ltd was higher by about 4% on the NSE, as investors assessed the impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which is set to be rolled out from 2026.
Under CBAM, steel and aluminium imports into the European Union will be taxed based on the volume of carbon emissions embedded in their production. The move is expected to raise landed costs for carbon-intensive steel exports, potentially squeezing margins for producers reliant on blast furnace routes.
However, the mechanism is also seen as an incentive for cleaner production technologies, improving the relative competitiveness of low-carbon steelmakers globally.
HEG and Graphite India stand to benefit from this transition as both companies manufacture graphite electrodes, a key input used in electric arc furnace (EAF) steelmaking. EAFs are considered significantly less carbon-intensive compared with traditional blast furnace methods and are central to the global push towards greener steel.
According to a note from Emkay Global Financial Services issued earlier in December 2025, Indian graphite electrode producers are entering a fresh capital expenditure cycle to capture the structural uplift in demand linked to EAF-based steel production.
Emkay estimates that a 5–7% increase in the global share of EAF steelmaking could translate into an additional 35–50 million tonnes of EAF steel output, creating sustained demand for graphite electrodes.
The brokerage highlighted three key global triggers underpinning the outlook for HEG and Graphite India: China’s policy shift to curb excessive competition, the rollout of Europe’s CBAM framework, and a more coordinated global policy push aimed at lifting the steel industry out of a prolonged downturn.
Together, these factors have renewed investor interest in graphite electrode makers, positioning them as potential beneficiaries of the global transition towards cleaner and more efficient steel production.
