Global carbon neutrality and peak carbon policies are driving strong demand for UHP graphite electrodes. Decarbonization is a global trend, and China announced its dual carbon goals in 2020, aiming to peak carbon emissions before 2030 and achieve carbon neutrality by 2060.

The electric arc furnace (EAF) steel industry consumes approximately 80% of UHP graphite electrodes. Therefore, the development of the EAF steel industry will greatly promote the market for UHP graphite electrodes. The Chinese government has strengthened macro-control over the transformation of the green and low-carbon economic structure and environmental protection. Since 2016, it has approved the installation of a large number of electric arc furnaces, leading to a rapid increase in EAF steel production. Sangraf Henan, a wholly-owned subsidiary of Sanergy Group, has been recognized by the Henan government as a national high-tech enterprise and is eligible for a preferential income tax rate of 15%.

Compared to traditional blast furnace steelmaking, using ultra-high power graphite electrodes in electric arc furnace steelmaking can save 74% energy, reduce carbon dioxide emissions by 72.3%, reduce sulfur dioxide emissions by 99%, and reduce nitrogen oxide emissions by 97%. Steel mills are gradually transitioning from blast furnaces to electric arc furnaces, with China's current adoption rate of electric arc furnaces at only 10%. The Chinese government aims to increase this to over 15% by 2025, which is still low compared to other developed countries such as the United States (approximately 70%), indicating significant room for development.