GrafTech Q4 2025 GrafTech International Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 GrafTech International Ltd Earnings Call
Operator: My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to GrafTech International's Q4 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mike Dillon, Vice President Investor Relations. Please go ahead.
Speaker #1: My name Carl is everyone to International's fourth like to welcome 2020 earnings At quarter call . mute to prevent any background noise on .
Speaker #1: the would like to withdraw your If you question , one again . star Thank question press turn the call over to Mike Vice simply President , ahead go during this After the
Mike Dillon: Good morning and welcome to GrafTech International's Q4 and full year 2025 Earnings Call. Thank you for joining us. Joining me on the call are Tim Flanagan, Chief Executive Officer, and Rory O'Donnell, Chief Financial Officer. Tim will begin with opening comments on our 2025 performance and an update on the commercial environment. Rory will then provide more details on our quarterly results and other financial matters, and Tim will close with additional comments on our outlook. We will then open the call to questions. Turning to our next slide.
Speaker #2: Joining me on the
Speaker #2: Chief Executive and Rory ODonnell chief Financial are Tim officer . Tim will begin opening
Mike Dillon: Tim will begin with opening comments on our 2025 performance and an update on the commercial environment. Rory will then provide more details on our quarterly results and other financial matters, and Tim will close with additional comments on our outlook. We will then open the call to questions. Turning to our next slide. As a reminder, our comments today may include forward-looking statements regarding, among other things, performance, trends, and strategies. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by forward-looking statements are shown here. We will also discuss certain non-GAAP financial measures, and these slides include the relevant non-GAAP reconciliations. You can find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website.
Speaker #2: comments on Good our 2025 performance and an on the you . update . Rory will
Speaker #2: more details on our quarterly environment results and commercial financial then provide , and close with additional comments on our . We will to outlook .
Mike Dillon: As a reminder, our comments today may include forward-looking statements regarding, among other things, performance, trends, and strategies. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by forward-looking statements are shown here. We will also discuss certain non-GAAP financial measures, and these slides include the relevant non-GAAP reconciliations. You can find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website. And I'll turn the call over to Tim.
Speaker #2: questions . Turning to our next open the call As other then reminder , slide . today may our forward include a looking Flanagan , statements regarding , among other things like to , performance trends and strategies statements are based .
Speaker #2: Statements shown here are based on current expectations and are subject to risks and uncertainties. Tim will also be looking at these statements. We discuss certain non-GAAP financial measures and will include these relevant slides in the presentation.
Speaker #2: You can find reconciliations of non-GAAP measures in the Investor section of our Relations website. A replay of the call will also be available on our website.
Mike Dillon: And I'll turn the call over to Tim. Good morning, and thank you for joining GrafTech's Q4 earnings call. We are operating in one of the most challenging environments the graphite electrode industry has seen in almost a decade, marked by global overcapacity, aggressive competitor behavior, geopolitical uncertainty, and steel production trends that remain subdued in many regions. Despite these headwinds, our team continues to deliver for our customers, manage our cost structure aggressively, operate safely, and make meaningful progress on the priorities we laid out at the beginning of 2025. One of our primary objectives for the year was to continue to grow our volumes and market share and improve our geographic mix by shifting more business towards the regions with stronger pricing fundamentals, particularly the United States. Our team executed the strategy effectively. On a full year basis, we increased sales volume by 6%.
Tim Flanagan: Good morning, and thank you for joining GrafTech's Q4 earnings call. We are operating in one of the most challenging environments the graphite electrode industry has seen in almost a decade, marked by global overcapacity, aggressive competitor behavior, geopolitical uncertainty, and steel production trends that remain subdued in many regions. Despite these headwinds, our team continues to deliver for our customers, manage our cost structure aggressively, operate safely, and make meaningful progress on the priorities we laid out at the beginning of 2025. One of our primary objectives for the year was to continue to grow our volumes and market share and improve our geographic mix by shifting more business towards the regions with stronger pricing fundamentals, particularly the United States. Our team executed the strategy effectively. On a full year basis, we increased sales volume by 6%.
Speaker #2: I'll now turn the call over Tim . Good morning , and thank you for . Graphics fourth quarter earnings to We are operating one of the most challenging environments , the electrode industry has seen in almost a call .
Speaker #2: decade , marked by a global overcapacity , aggressive competitor uncertainty and steel , geopolitical trends that remain subdued in many regions . Despite team these to deliver for our headwinds , our customers , manage continued our cost structure aggressively , operate safely and make meaningful we laid behavior beginning of priorities 2025 .
Speaker #2: One of our primary objectives for the year was to continue to grow our volumes and market share, and improve our geographic mix by shifting more regions with pricing business towards fundamentals, particularly the United States.
Speaker #2: Our team used this strategy effectively on a full-year basis. We increased sales volume by 6%, as we have shared. Our commercial strategy includes making deliberate decisions to forgo volume opportunities that do not meet our margin requirements.
Mike Dillon: As we have shared, our commercial strategy includes making deliberate decisions to walk away from volume opportunities that do not meet our margin requirements. This discipline is essential to protecting our long-term value, and we at GrafTech refuse to follow some of our competitors in the race to the bottom. While this meant that our full year volume finished below our most recent guidance range, it was the right decision for our business and consistent with our commitment to value-focused growth, not volume for volume's sake. As it relates to our geographic mix shift, in the United States, our sales volume grew 48% for the full year, and in the Q4 alone, our US volume was up 83% versus the prior year.
Tim Flanagan: As we have shared, our commercial strategy includes making deliberate decisions to walk away from volume opportunities that do not meet our margin requirements. This discipline is essential to protecting our long-term value, and we at GrafTech refuse to follow some of our competitors in the race to the bottom. While this meant that our full year volume finished below our most recent guidance range, it was the right decision for our business and consistent with our commitment to value-focused growth, not volume for volume's sake. As it relates to our geographic mix shift, in the United States, our sales volume grew 48% for the full year, and in the Q4 alone, our US volume was up 83% versus the prior year.
Speaker #2: This discipline is essential to protecting our long-term value, and we walked away at GrafTech when terms were refused, choosing not to follow some of our competitors in the race to the bottom.
Speaker #2: While this meant that our year volume full recent guidance range , it decision for our our most business and consistent finished below with our commitment to value focused growth , not volume for volume sake as relates to our geographic mix , in the United States .
Speaker #2: sales it Our volume grew 48% for the full year , and in the fourth quarter alone , our US volume was was the right up 83% versus the prior year .
Speaker #2: sales it Our volume grew 48% for the full year , and in the fourth quarter alone , our US volume was was the right up 83% versus the prior year shift remains towards the US , highest priced the region globally some of the , helped pressure we pricing other markets .
Mike Dillon: The shift towards the US, which remains the highest priced region globally, helped mitigate some of the pricing pressure we experience in other markets, as we'll speak to later. Cost management was another key area of focus for 2025, and we delivered meaningful results without compromising our commitment to quality, safety, or the environment. For the full year, we achieved an 11% reduction in our cash cost of goods sold per metric ton. This brings the cumulative reduction since the end of 2023 to 31%, a remarkable achievement over a two-year period. Our ongoing cost management initiatives, including enhanced procurement strategies, energy efficiency improvements, and disciplined production scheduling, have been instrumental in driving these results. In addition, a key element of our strong cost performance in 2025 was the effective management of the impact of tariffs on our cost structure.
Tim Flanagan: The shift towards the US, which remains the highest priced region globally, helped mitigate some of the pricing pressure we experience in other markets, as we'll speak to later. Cost management was another key area of focus for 2025, and we delivered meaningful results without compromising our commitment to quality, safety, or the environment. For the full year, we achieved an 11% reduction in our cash cost of goods sold per metric ton. This brings the cumulative reduction since the end of 2023 to 31%, a remarkable achievement over a two-year period. Our ongoing cost management initiatives, including enhanced procurement strategies, energy efficiency improvements, and disciplined production scheduling, have been instrumental in driving these results. In addition, a key element of our strong cost performance in 2025 was the effective management of the impact of tariffs on our cost structure.
Speaker #2: As to later we'll speak , cost management was another key area of focus for 2025 , and we mitigate meaningful delivered results without compromising our commitment to quality , safety or the environment .
Speaker #2: We achieved an 11% reduction in our cash cost of goods sold per metric ton. This brings the cumulative reduction since the end of 2023 to 31%.
Speaker #2: A remarkable achievement over a two year period . ongoing cost management initiatives enhanced , including strategies Our , energy procurement efficiency improvements and disciplined production scheduling have been instrumental in driving these results .
Speaker #2: In addition, a key element of our strong performance in 2025 was the effective management of the impact of tariffs on our cost structure. Overall, our
Mike Dillon: Overall, our cost management efforts have created a more agile, more efficient manufacturing footprint that positions us well to control our production costs while navigating volatility and demand. These actions, combined with the effective management of our working capital and capital expenditure levels, resulted in full-year cash flow performance and a year-end liquidity position that exceeded our expectations. To that point, including cash on hand of $138 million, we ended 2025 with a liquidity position of $340 million, a level which enables us to maintain stability despite the persistence of industry-wide challenges. Lastly, we delivered on all of these objectives while achieving meaningful improvement in our safety performance. Turning to the next slide and building on this point. As you can see, our Total Recordable Incident Rate improved to 0.41 in 2025, representing our best safety performance on record.
Tim Flanagan: Overall, our cost management efforts have created a more agile, more efficient manufacturing footprint that positions us well to control our production costs while navigating volatility and demand. These actions, combined with the effective management of our working capital and capital expenditure levels, resulted in full-year cash flow performance and a year-end liquidity position that exceeded our expectations. To that point, including cash on hand of $138 million, we ended 2025 with a liquidity position of $340 million, a level which enables us to maintain stability despite the persistence of industry-wide challenges. Lastly, we delivered on all of these objectives while achieving meaningful improvement in our safety performance. Turning to the next slide and building on this point. As you can see, our Total Recordable Incident Rate improved to 0.41 in 2025, representing our best safety performance on record.
Speaker #2: Cost management efforts have more created an agile, more efficient manufacturing footprint that positions us well to control our U.S. costs while navigating volatility in demand.
Speaker #2: These combined with the effective management of our working capital and expenditure capital levels , resulted in full year cash flow performance and a year end liquidity position exceeded our that expectations .
Speaker #2: To that point , including cash on hand of $138 million . ended 2025 with a liquidity We of $340 million , a level which enables us to maintain stability despite the persistence of wide industry challenges position .
Speaker #2: Lastly , we delivered on all of these objectives while achieving meaningful improvement in our safety performance . next slide and building on this point .
Speaker #2: Turning to the As you can see , our total recordable incident rate improved to 0.41 in 2025 , best safety performance representing our record on as we enter Sustaining and momentum building on this must remain a critical .
Mike Dillon: As we enter 2026, sustaining and building on this momentum must remain a critical focus. Our ultimate goal is zero injuries, and we will continue to work relentlessly towards that standard every single day. Looking back on all that was accomplished in 2025, I want to sincerely thank our entire team around the world for the remarkable efforts, resilience, and commitment during this pivotal time. Turning to the next slide, let me provide our current thoughts on steel industry trends as context for the rest of our discussion on our performance and outlook. Global steel production outside of China was 843 million tons in 2025, up less than 1% compared to the prior year, with a global utilization rate of approximately 67% on a full-year basis for 2025.
Tim Flanagan: As we enter 2026, sustaining and building on this momentum must remain a critical focus. Our ultimate goal is zero injuries, and we will continue to work relentlessly towards that standard every single day. Looking back on all that was accomplished in 2025, I want to sincerely thank our entire team around the world for the remarkable efforts, resilience, and commitment during this pivotal time. Turning to the next slide, let me provide our current thoughts on steel industry trends as context for the rest of our discussion on our performance and outlook. Global steel production outside of China was 843 million tons in 2025, up less than 1% compared to the prior year, with a global utilization rate of approximately 67% on a full-year basis for 2025.
Speaker #2: Our focus goal is ultimate zero injuries continue to work relentlessly towards standard every single day . Looking all that was back on accomplished in 2025 , I want to 2026 .
Speaker #2: entire team around the world for the remarkable , resilience and that commitment during this pivotal time . Turning to the next slide , let efforts me provide our current thoughts on steel industry trends as context for the rest of our discussion on our performance and outlook .
Speaker #2: Global steel production outside of China was 843 million tons in 2025, up less than 1% compared to the prior year, with a global utilization rate of approximately 67% on a full-year basis for 2025.
Mike Dillon: Looking at some of our key commercial regions using data recently published by the World Steel Association, for North America, steel production was up 1% in 2025 compared to the prior year, driven by 3% year-over-year growth in the United States. Conversely, in the EU, steel output in 2025 decreased 3% compared to 2024, remaining well below historical levels of steel production and utilization for that region. In fact, with 126 million tons of steel production within the EU in 2025, this represented a decline of more than 15% compared to the historical high levels of EU steel production achieved in 2021. Further, we estimate that steel utilization rates within the EU averaged just over 60% in 2025, which is well below the global average.
Tim Flanagan: Looking at some of our key commercial regions using data recently published by the World Steel Association, for North America, steel production was up 1% in 2025 compared to the prior year, driven by 3% year-over-year growth in the United States. Conversely, in the EU, steel output in 2025 decreased 3% compared to 2024, remaining well below historical levels of steel production and utilization for that region. In fact, with 126 million tons of steel production within the EU in 2025, this represented a decline of more than 15% compared to the historical high levels of EU steel production achieved in 2021. Further, we estimate that steel utilization rates within the EU averaged just over 60% in 2025, which is well below the global average.
Speaker #2: Looking at some of our key commercial regions using data published by the Steel Association North America , recently production was World up 1% in 2025 compared to the prior year , driven by growth in the United States 3% year over year .
Speaker #2: the Conversely , in EU , for output in 2020 . Five decreased 3% to 2024 , compared well below remaining steel levels of historical production and utilization for that region fact , with 126 million tons of steel production within .
Speaker #2: the EU in 2025 , this decline represented a of more than 15% compared to the historical high In levels steel of EU production achieved in 2021 .
Speaker #2: Further, we estimate that steel utilization rates within the EU averaged just over 60%, which is well below the 2025 global average.
Mike Dillon: Although the overall steel sector is still experiencing short-term challenges, as we've mentioned previously, there are indicators of rebound in the steel market that have started to appear. Based on World Steel's most recent short-range outlook for steel demand, globally outside of China, World Steel is projecting 2026 steel demand to grow at 3.5% year-over-year. For the US, where the steel industry has experienced relative stability, World Steel is projecting a 1.8% steel demand growth in 2026. Along with this demand growth, favorable trade policies are expected to further support US steel production. In Europe, where the steel industry has been more challenged, World Steel is projecting a return of steel demand growth in the near term, forecasting demand growth of 3.2% for 2026.
Tim Flanagan: Although the overall steel sector is still experiencing short-term challenges, as we've mentioned previously, there are indicators of rebound in the steel market that have started to appear. Based on World Steel's most recent short-range outlook for steel demand, globally outside of China, World Steel is projecting 2026 steel demand to grow at 3.5% year-over-year. For the US, where the steel industry has experienced relative stability, World Steel is projecting a 1.8% steel demand growth in 2026. Along with this demand growth, favorable trade policies are expected to further support US steel production. In Europe, where the steel industry has been more challenged, World Steel is projecting a return of steel demand growth in the near term, forecasting demand growth of 3.2% for 2026.
Speaker #2: Although the overall steel sector is still experiencing term short challenges , as we've previously , there mentioned are indicators of rebound in the steel to appear market have based on World Steel's most recent outlook for steel demand short range globally .
Speaker #2: Outside of China . World steel is projecting 2026 steel demand to grow at 3.5% year over year for the US , with steel industry has experienced relative stability is World steel projecting .
Speaker #2: a 1.8% steel demand growth in 2026 , demand along with this growth , favorable trade policies are expected to further support US steel production in Europe , where the steel industry has challenged .
Speaker #2: steel is projecting a been more World steel return of demand growth in the near term demand growth , forecasting 3.2% of for 2026 .
Mike Dillon: This reflects some of the demand drivers we've discussed in the past, including initiatives to increase infrastructure investments, defense spending representing some of the key steel-intensive industries. In addition, provisions within the Carbon Border Adjustment Mechanism, or CBOM, implemented at the beginning of 2026, as well as new trade protection measures that will be effective later this year, are expected to support higher levels of production in this key commercial region for GrafTech. Against this backdrop, we estimate that globally outside of China, demand for graphite electrodes will increase slightly in 2026, with all major regions expected to contribute. That said, it's not the level of electrode demand that's the key factor holding back our industry today. It's the supply side imbalance and ultimately pricing.
Tim Flanagan: This reflects some of the demand drivers we've discussed in the past, including initiatives to increase infrastructure investments, defense spending representing some of the key steel-intensive industries. In addition, provisions within the Carbon Border Adjustment Mechanism, or CBOM, implemented at the beginning of 2026, as well as new trade protection measures that will be effective later this year, are expected to support higher levels of production in this key commercial region for GrafTech. Against this backdrop, we estimate that globally outside of China, demand for graphite electrodes will increase slightly in 2026, with all major regions expected to contribute. That said, it's not the level of electrode demand that's the key factor holding back our industry today. It's the supply side imbalance and ultimately pricing.
Speaker #2: This the reflects some of drivers we've demand discussed in the past , including initiatives to increase infrastructure investments , defense spending , representing key steel some of the intensive industries .
Speaker #2: In provisions within the carbon addition, border mechanism, or CBAM, implemented at the beginning of adjustment as well as 2026, as new trade protection measures that will be effective later, these are expected to impact levels of production in key commercial regions.
Speaker #2: in this Graftech For year , Against this backdrop , we . estimate that higher globally , outside of China , demand support graphite electrodes will slightly with all in 2026 , increase major expected to contribute regions .
Speaker #2: It's not the level of demand that's the key factor holding back our industry today. It's the supply side, and balance, and pricing.
Mike Dillon: This supply imbalance is driven by the gross overcapacity that has been built in both China and India, with Indian manufacturers expressing plans to bring additional and unneeded capacity to the market. Combined, they are flooding the markets with cheaply priced exports, which continue to distort the competitive landscape and threaten to destabilize the entire supply chain. In response, pricing behavior of other competitors has become increasingly aggressive and arguably irrational. All of this has translated into realized prices for the graphite electrode industry that have declined significantly over the past few years. For some time, we've been clear that the pricing levels are unsustainably low and not aligned with the indispensable nature of an electrode, let alone the level of investment required to maintain a stable, reliable supply of graphite electrodes for the steel industry.
Tim Flanagan: This supply imbalance is driven by the gross overcapacity that has been built in both China and India, with Indian manufacturers expressing plans to bring additional and unneeded capacity to the market. Combined, they are flooding the markets with cheaply priced exports, which continue to distort the competitive landscape and threaten to destabilize the entire supply chain. In response, pricing behavior of other competitors has become increasingly aggressive and arguably irrational. All of this has translated into realized prices for the graphite electrode industry that have declined significantly over the past few years. For some time, we've been clear that the pricing levels are unsustainably low and not aligned with the indispensable nature of an electrode, let alone the level of investment required to maintain a stable, reliable supply of graphite electrodes for the steel industry.
Speaker #2: supply This imbalance is driven by the ultimately expressing plans to bring unneeded China and additional and capacity to the market . Combined , they are flooding the markets with cheaply priced exports , which to continue to landscape and threaten to distort the destabilize the entire supply competitive chain .
Speaker #2: In response , behavior of other competitors have become increasingly pricing aggressive arguably and irrational . All of this is translated realized into prices graphite electrode industry that have declined significantly over the past few years .
Speaker #2: Sometimes, we've been clear that the levels are unsustainably low and not pricing in the nature of indispensable investment required to maintain a stable, reliable supply of graphite electrodes for the steel industry, aligned alone with let investment to maintain a required electrode.
Speaker #2: Further, the level of capacity rationalizations that have been announced by ex-Chinese electrode producers to address the structural overcapacity issue within our industry has been inadequate to date.
Mike Dillon: Further, the level of capacity rationalizations that have been announced by ex-Chinese electrode producers to date has been inadequate to address the structural overcapacity issue within our industry. As a result, we saw a deterioration of competitor pricing discipline in the Q4 and expect that pressure to continue into 2026. This has happened even as steelmakers in the US and Europe announced price increases for finished steel products, reinforcing the disconnect between value creation in the steel industry and the pricing environment for graphite electrodes, a mission-critical consumable. Ultimately, the current market dynamics endanger long-term viability of the graphite electrode industry. Given these realities, structural change on the supply side is long overdue, and a failure to change the current course of the electrode industry will undoubtedly result in an equilibrium that will harm the steel industry for the long term.
Tim Flanagan: Further, the level of capacity rationalizations that have been announced by ex-Chinese electrode producers to date has been inadequate to address the structural overcapacity issue within our industry. As a result, we saw a deterioration of competitor pricing discipline in the Q4 and expect that pressure to continue into 2026. This has happened even as steelmakers in the US and Europe announced price increases for finished steel products, reinforcing the disconnect between value creation in the steel industry and the pricing environment for graphite electrodes, a mission-critical consumable. Ultimately, the current market dynamics endanger long-term viability of the graphite electrode industry. Given these realities, structural change on the supply side is long overdue, and a failure to change the current course of the electrode industry will undoubtedly result in an equilibrium that will harm the steel industry for the long term.
Speaker #2: As a result , we saw deterioration of competitor pricing discipline in the and expect that pressure to continue fourth quarter 2026 . This happened even into as steelmakers in the Europe US and announced price increases for finished products , reinforcing the steel disconnect between value creation and steel industry and the pricing environment for graphite electrodes .
Speaker #2: mission consumable critical A . Ultimately , the current market dynamics endanger long term viability of the graphite these realities , structural change on the supply side is long failure to and a change the current the industry electrode electrode result in equilibrium that will harm the steel long industry for the term undoubtedly .
Speaker #2: mission consumable critical A . Ultimately , the current market dynamics endanger long term viability of the graphite these realities , structural change on the supply side is long failure to and a change the current the industry electrode electrode result in equilibrium that will harm the steel long industry for the term undoubtedly .
Mike Dillon: As the only pure-play graphite electrode producer outside of India and China, we remain committed to actively shifting this dynamic in order to support our customers who rely on us for quality and reliable products. To that end, let me send a clear message to all of our stakeholders. As a leader in the graphite electrode industry, GrafTech has and will continue to act decisively. In light of the prolonged downturn in the market environment, management, with the support of our board, continues the evaluation of a number of areas, including optimizing our manufacturing footprint, opportunities for trade or policymaking support on a number of fronts, as well as other potential strategic partnerships and sources of capital. The focus of these efforts is to identify opportunities to enhance efficiency, preserve optionality, and position GrafTech for long-term value creation.
Tim Flanagan: As the only pure-play graphite electrode producer outside of India and China, we remain committed to actively shifting this dynamic in order to support our customers who rely on us for quality and reliable products. To that end, let me send a clear message to all of our stakeholders. As a leader in the graphite electrode industry, GrafTech has and will continue to act decisively. In light of the prolonged downturn in the market environment, management, with the support of our board, continues the evaluation of a number of areas, including optimizing our manufacturing footprint, opportunities for trade or policymaking support on a number of fronts, as well as other potential strategic partnerships and sources of capital. The focus of these efforts is to identify opportunities to enhance efficiency, preserve optionality, and position GrafTech for long-term value creation.
Speaker #2: Only pure-play graphite producer outside of India and China, we in the industry remain committed to actively shifting dynamics in this order to customers who rely on us for quality and reliable products.
Speaker #2: To that end, let me send a clear message to stakeholders. As a leader in the graphite electrode industry, GrafTech has and will continue to act decisively in light of the prolonged downturn market. With the support of our environment board, we continue the evaluation of a number of management actions.
Speaker #2: areas , including optimizing our manufacturing footprint , opportunities for trade or policy , making , support on a number of fronts , as well as other potential partnerships and sources of capital .
Speaker #2: The focus of these efforts is to identify opportunities to enhance efficiency , preserve and optionality , position graftech for long term value creation .
Mike Dillon: With that, I'm going to turn the call over to Rory, who will provide some more color on our commercial and financial performance for the Q4. I'll then wrap up our prepared remarks with further comments on our outlook, after which we'll take your questions. Rory?
Tim Flanagan: With that, I'm going to turn the call over to Rory, who will provide some more color on our commercial and financial performance for the Q4. I'll then wrap up our prepared remarks with further comments on our outlook, after which we'll take your questions. Rory?
Speaker #2: With that, I'm going to turn the call over to Rory. We'll provide some more color on our commercial and financial performance for the fourth quarter.
Speaker #2: wrap up our remarks with further prepared comments on our outlook . I'll then After which we'll take your questions . Rory . Thank you , Tim , and good morning , everyone .
Rory O'Donnell: Thank you, Tim, and good morning, everyone. Starting with our operations, our production volume for the Q4 was approximately 28,000 metric tons, resulting in a capacity utilization rate of 60% for the quarter. This brought our full-year production level and utilization rate to 112,000 metric tons and 63%, respectively. On the commercial front, our sales volume in the Q4 was approximately 27,000 metric tons. This was flat to the prior year and fell short of our original expectations for the quarter. While a portion of the shortfall was attributed to the timing of certain shipments that shifted into the first quarter of 2026, as Tim noted, it also reflected our commercial strategy to not pursue certain volume opportunities that do not meet our margin expectations, particularly in the Middle East and in Europe.
Rory O'Donnell: Thank you, Tim, and good morning, everyone. Starting with our operations, our production volume for the Q4 was approximately 28,000 metric tons, resulting in a capacity utilization rate of 60% for the quarter. This brought our full-year production level and utilization rate to 112,000 metric tons and 63%, respectively. On the commercial front, our sales volume in the Q4 was approximately 27,000 metric tons. This was flat to the prior year and fell short of our original expectations for the quarter. While a portion of the shortfall was attributed to the timing of certain shipments that shifted into the first quarter of 2026, as Tim noted, it also reflected our commercial strategy to not pursue certain volume opportunities that do not meet our margin expectations, particularly in the Middle East and in Europe.
Speaker #2: Starting with our operations , our production volume for the approximately 28,000 metric tons fourth quarter was , resulting in a capacity utilization rate of 60% for the quarter This brought our full year production level and utilization rate to 112,000 metric tons , respectively and 63% , , on commercial front , our sales a volume in the fourth quarter was approximately 27,000 metric tons .
Speaker #2: This was flat to the prior year and fell short of our original expectations for the quarter a portion . While of the shortfall was attributed to the timing of certain shipments , that shifted into the first quarter of 2026 , as Tim noted , also it reflected our commercial strategy to not pursue certain volume opportunities that do not meet our margin expectations , particularly in the Middle East and in Europe .
Rory O'Donnell: In the US, we grew our sales volume in the Q4 by 83% year-over-year, reflecting our ongoing success in shifting a significant portion of our volume to this key region, as we have discussed. For the full year, our sales volume within the US grew 48% compared to 2024, which is an impressive result given that steel production in the US was up only 3% in 2025. As a result, shipments to our US customers represented 31% of our full-year sales volume in 2025 compared to 22% in the prior year. Turning to price, our average selling price for the Q4 was approximately $4,000 per metric ton, which represented a 9% decline compared to the prior year and, sequentially, a 5% decline compared to the Q3.
Rory O'Donnell: In the US, we grew our sales volume in the Q4 by 83% year-over-year, reflecting our ongoing success in shifting a significant portion of our volume to this key region, as we have discussed. For the full year, our sales volume within the US grew 48% compared to 2024, which is an impressive result given that steel production in the US was up only 3% in 2025. As a result, shipments to our US customers represented 31% of our full-year sales volume in 2025 compared to 22% in the prior year. Turning to price, our average selling price for the Q4 was approximately $4,000 per metric ton, which represented a 9% decline compared to the prior year and, sequentially, a 5% decline compared to the Q3.
Speaker #2: In the US, we grew our sales volume in the fourth quarter by 83% year over year, reflecting our ongoing success in shifting a significant portion of our volume to this key region.
Speaker #2: have As we discussed for the full year , our sales volume within the US grew 48% compared to 2020 . Four , which is an impressive given that result steel production in the US was up only 3% in 2025 .
Speaker #2: As a result, shipments to our US customers represented 31% of our full sales volume in 2025, compared to 22% in the prior year.
Speaker #2: Turning to price, our average selling price for the fourth quarter was approximately $4,000 per metric ton, which represented a 9% decline compared to the prior year and, sequentially, a 5% decline compared to the third quarter.
Rory O'Donnell: The year-over-year decrease was driven by the substantial completion in 2024 of higher-priced long-term agreements, while the sequential decline reflected the competitive pricing dynamics that Tim discussed. Our strategy to shift more of our geographic mix towards the US helped to partially mitigate these impacts. In fact, we estimate that the higher mix of US volume compared to the prior year boosted our weighted average selling price for the Q4 by nearly $200 per metric ton and by approximately $135 per metric ton on a full-year basis. Turning to costs, for the Q4, our cash costs on a per metric ton basis were $4,019, representing a 2% year-over-year decline.
Rory O'Donnell: The year-over-year decrease was driven by the substantial completion in 2024 of higher-priced long-term agreements, while the sequential decline reflected the competitive pricing dynamics that Tim discussed. Our strategy to shift more of our geographic mix towards the US helped to partially mitigate these impacts. In fact, we estimate that the higher mix of US volume compared to the prior year boosted our weighted average selling price for the Q4 by nearly $200 per metric ton and by approximately $135 per metric ton on a full-year basis. Turning to costs, for the Q4, our cash costs on a per metric ton basis were $4,019, representing a 2% year-over-year decline.
Speaker #2: The year over year driven decrease was by the substantial completion in higher priced long term 2024 of While the sequential decline reflected competitive pricing dynamics that the Tim discussed , our strategy to shift more of our geographic mix US towards the helped to partially mitigate these impacts .
Speaker #2: In fact , we estimate that the higher mix of volume compared US prior year boosted our average selling weighted price for the fourth quarter by nearly to the $200 per metric ton , and by approximately $135 per metric ton on a full year basis .
Speaker #2: Turning to costs for the fourth quarter , our cash costs on a per metric ton basis were $4,019 , representing a 2% year over year decline .
Rory O'Donnell: While this is higher than our cost per metric ton reported in the first three quarters of the year, as we have noted in prior calls, we will have periodic quarter-to-quarter fluctuations in our cash cost recognition as a result of timing impacts, and this sequential increase was anticipated. For the full year, our cash costs were just over $3,800 per metric ton, an 11% reduction compared to 2024. This exceeded our previous guidance of a 10% year-over-year decline and, remarkably, resulted in a two-year cumulative decline in our cash costs per metric ton of 31% compared to 2023. Our continued outperformance in this area reflects the team's extraordinary work in identifying and executing cost reduction opportunities across various components of our variable and fixed spending in order to control production costs at various levels of demand.
Rory O'Donnell: While this is higher than our cost per metric ton reported in the first three quarters of the year, as we have noted in prior calls, we will have periodic quarter-to-quarter fluctuations in our cash cost recognition as a result of timing impacts, and this sequential increase was anticipated. For the full year, our cash costs were just over $3,800 per metric ton, an 11% reduction compared to 2024. This exceeded our previous guidance of a 10% year-over-year decline and, remarkably, resulted in a two-year cumulative decline in our cash costs per metric ton of 31% compared to 2023. Our continued outperformance in this area reflects the team's extraordinary work in identifying and executing cost reduction opportunities across various components of our variable and fixed spending in order to control production costs at various levels of demand.
Speaker #2: While this is higher than our cost per metric ton reported in the first three quarters of the year , as we have noted in prior calls , we will periodic quarter have to quarter our cash fluctuations in cost recognition as a result of timing impacts .
Speaker #2: sequential this And increase was anticipated the for full year . Our cash costs were just over $3,800 per metric ton , an 11% reduction compared to 2020 .
Speaker #2: This exceeded our previous Four . guidance of a 10% year over year decline , and remarkably , resulted in a two year cumulative decline in our cash cost per metric ton of 31% , compared to 2023 .
Speaker #2: Our continued outperformance in this area reflects the team's extraordinary work in identifying and executing cost reduction opportunities across various components of our variable and fixed spending in control order to production costs at various of demand levels .
Rory O'Donnell: These include drawing on our extensive experience in research and development to reduce the consumption of specific raw materials, executing procurement initiatives related to broadening of our supplier network, helping us to minimize our variable costs even further, and capitalizing on our volume growth to enhance our fixed cost leverage. Further, we are achieving all of this while maintaining our dedication to product quality and reliability, as well as upholding our commitments to environmental responsibility and safety. Overall, we are pleased with this ongoing progress towards achieving our long-term expectation of cash costs being approximately $3,600 to $3,700 per metric ton. Turning to the next slide and factoring all of this in, for the Q4, we had a net loss of $65 million, or $2.50 per share.
Rory O'Donnell: These include drawing on our extensive experience in research and development to reduce the consumption of specific raw materials, executing procurement initiatives related to broadening of our supplier network, helping us to minimize our variable costs even further, and capitalizing on our volume growth to enhance our fixed cost leverage. Further, we are achieving all of this while maintaining our dedication to product quality and reliability, as well as upholding our commitments to environmental responsibility and safety. Overall, we are pleased with this ongoing progress towards achieving our long-term expectation of cash costs being approximately $3,600 to $3,700 per metric ton. Turning to the next slide and factoring all of this in, for the Q4, we had a net loss of $65 million, or $2.50 per share.
Speaker #2: These include drawing on our extensive experience in research and development to reduce the consumption of specific raw materials , executing procurement initiatives related to broadening of our supplier network , helping us to minimize our variable even costs further , and capitalizing on our volume growth to enhance our leverage .
Speaker #2: Further, we are achieving all of this while maintaining our dedication to quality product and reliability, as well as upholding our commitments to environmental responsibility and safety.
Speaker #2: Overall, we are pleased with this ongoing progress towards achieving our long-term expectation of cash costs being approximately $3,600 to $3,700 per metric ton.
Speaker #2: Turning to the next slide and factoring all of this in for the fourth quarter, we had a net loss of $65 million, or $2.50 per share.
Rory O'Donnell: This compares to a net loss of $49 million, or $1.92 per share in the prior year, as the reduction in our costs only partially offset the year-over-year decline in weighted average pricing. For the Q4, Adjusted EBITDA was negative $22 million compared to negative $7 million in the prior year, with the change reflecting the same drivers I just noted. Turning to cash flow, for the Q4, cash used in operating activities was $21 million, while adjusted free cash flow was negative $39 million. As a reminder, our semi-annual interest payments of approximately $34 million related to our senior notes occur in the second and fourth quarters of each year. In addition, our CapEx spending for 2025 was heavily weighted toward the Q4, with $18 million of our $39 million full-year spend coming in the Q4.
Rory O'Donnell: This compares to a net loss of $49 million, or $1.92 per share in the prior year, as the reduction in our costs only partially offset the year-over-year decline in weighted average pricing. For the Q4, Adjusted EBITDA was negative $22 million compared to negative $7 million in the prior year, with the change reflecting the same drivers I just noted. Turning to cash flow, for the Q4, cash used in operating activities was $21 million, while adjusted free cash flow was negative $39 million. As a reminder, our semi-annual interest payments of approximately $34 million related to our senior notes occur in the second and fourth quarters of each year. In addition, our CapEx spending for 2025 was heavily weighted toward the Q4, with $18 million of our $39 million full-year spend coming in the Q4.
Speaker #2: This compares to a net loss of $49 million , or $1.92 per share , in the prior year . As the reduction in our costs , only partially offset the year over year decline in weighted average price .
Speaker #2: For the fourth quarter . Adjusted EBITDA was -$22 million compared to year . With -$7 million in the prior reflecting the the change same drivers that just noted .
Speaker #2: Turning to cash flow for the fourth quarter , cash used in operating activities was $21 million , while adjusted free cash flow was -$39 million .
Speaker #2: As a reminder, our semiannual interest payments of approximately $34 million related to our senior notes occur in the second and fourth quarters of each year.
Speaker #2: In addition, our CapEx spending for 2025 was heavily weighted toward the fourth quarter, with $18 million of our $39 million full-year spend coming in the fourth quarter.
Rory O'Donnell: These factors were partially offset by a favorable change in net working capital for the Q4, as was expected. Overall, as Tim noted, on a full-year basis, we performed ahead of our cash flow projections for 2025 and exceeded our year-end liquidity expectations. Turning to the next slide and expanding on this point, we ended the year with total liquidity of $340 million, consisting of $138 million of cash, $102 million of availability under our revolving credit facility, and $100 million of availability under our delayed draw term loan. As a reminder, the untapped portion of our delayed draw term loan is available to be drawn until July 2026, and our expectation remains to draw on this residual portion. As it relates to our $225 million revolving credit facility, which matures in November 2028, we had no borrowings outstanding as of the end of the year.
Rory O'Donnell: These factors were partially offset by a favorable change in net working capital for the Q4, as was expected. Overall, as Tim noted, on a full-year basis, we performed ahead of our cash flow projections for 2025 and exceeded our year-end liquidity expectations. Turning to the next slide and expanding on this point, we ended the year with total liquidity of $340 million, consisting of $138 million of cash, $102 million of availability under our revolving credit facility, and $100 million of availability under our delayed draw term loan. As a reminder, the untapped portion of our delayed draw term loan is available to be drawn until July 2026, and our expectation remains to draw on this residual portion. As it relates to our $225 million revolving credit facility, which matures in November 2028, we had no borrowings outstanding as of the end of the year.
Speaker #2: These factors were partially offset by a favorable change in net working capital for the fourth quarter , as was expected overall , as Tim a full noted , on year basis , performed ahead of our cash flow projections for 2025 and exceeded our year end liquidity expectations . slide .
Speaker #2: These factors were partially offset by a favorable change in net working capital for the fourth quarter , as was expected overall , as Tim a full noted , on year basis , performed ahead of our cash flow projections for 2025 and exceeded our year end liquidity expectations .
Speaker #2: to the next And Turning expanding on point ended this the . We year with total liquidity of $340 million , consisting of $138 million of cash , $102 million of availability under our revolving credit facility , and $100 million of availability under our delayed draw term loan .
Speaker #2: As a reminder, the untapped or delayed draw term loan is available to be drawn until July of 2026, and our expectation remains to draw on this residual portion as it relates to our $225 million revolving credit facility, which matures in November of 2028.
Speaker #2: We had no borrowings outstanding as of the end of the year . However , based springing financial covenant that on financial performance , borrowing availability under the revolver remains limited to approximately $115 million .
Rory O'Donnell: However, based on a springing financial covenant that considers our recent financial performance, borrowing availability under the revolver remains limited to approximately $115 million, less currently outstanding letters of credit, which were approximately $14 million as of the end of the year. Overall, we believe our $340 million liquidity position, along with the absence of substantial debt maturities until December of 2029, will support our ability to manage through near-term, industry-wide challenges and provide strategic flexibility as we evaluate options to ensure the long-term viability of our business. In my closing remarks, I would like to echo Tim's sentiments and extend my gratitude for the outstanding commitment and hard work demonstrated by our team members worldwide, and thank our customers, and our investors for their continued partnership. I will now turn the call back to Tim. Thank you, Rory.
Rory O'Donnell: However, based on a springing financial covenant that considers our recent financial performance, borrowing availability under the revolver remains limited to approximately $115 million, less currently outstanding letters of credit, which were approximately $14 million as of the end of the year. Overall, we believe our $340 million liquidity position, along with the absence of substantial debt maturities until December of 2029, will support our ability to manage through near-term, industry-wide challenges and provide strategic flexibility as we evaluate options to ensure the long-term viability of our business. In my closing remarks, I would like to echo Tim's sentiments and extend my gratitude for the outstanding commitment and hard work demonstrated by our team members worldwide, and thank our customers, and our investors for their continued partnership. I will now turn the call back to Tim.
Speaker #2: Less . Currently outstanding letters of credit , which were approximately $14 million as of the end of the year . Overall , we believe our position , along $340 million liquidity with the absence debt of substantial maturities until December of 2029 , will support our ability to manage near-term through , industry wide challenges and strategic provide flexibility as we evaluate options to ensure the long term viability of our business .
Speaker #2: In my closing remarks, I would like to echo Tim's sentiments and extend my gratitude for the outstanding commitment and hard work demonstrated by our team members worldwide, and thank our customers and our investors for their continued partnership.
Tim Flanagan: Thank you, Rory. I'll conclude our prepared remarks with some further comments on our outlook. As we've noted, given the persistent market challenges, we must evaluate and take decisive actions to preserve the long-term sustainability of our business. I want to be clear that while doing so, we remain committed to safety, product quality, delivering on our financial objectives, and ultimately meeting the needs of our customers who rely on us for high-quality and reliable products. To that end, we've established a number of strategic priorities and objectives for 2026 that leverage the commercial, operational, and financial progress that we have made over the past couple of years. These include building on our commercial momentum to further grow our volume and market share in 2026.
Speaker #2: I will now turn the call back to Tim . Thank you . Rory . I'll conclude our prepared remarks with some comments on further our outlook .
Rory O'Donnell: I'll conclude our prepared remarks with some further comments on our outlook. As we've noted, given the persistent market challenges, we must evaluate and take decisive actions to preserve the long-term sustainability of our business. I want to be clear that while doing so, we remain committed to safety, product quality, delivering on our financial objectives, and ultimately meeting the needs of our customers who rely on us for high-quality and reliable products. To that end, we've established a number of strategic priorities and objectives for 2026 that leverage the commercial, operational, and financial progress that we have made over the past couple of years. These include building on our commercial momentum to further grow our volume and market share in 2026.
Speaker #2: As we've noted, given the persistent market challenges, we must evaluate and take decisive actions to preserve the long-term sustainability of our business.
Speaker #2: I want to term be clear while doing so , we that committed to safety . Product quality financial objectives ultimately , delivering on our meeting the and needs of our customers who us for high rely on quality and reliable products .
Speaker #2: End, we've established a number of strategic priorities and objectives for 2026 that leverage the commercial, operational, and financial progress that we've made over the past couple of years.
Speaker #2: These include building on commercial our momentum to further grow our volume and market share in 2026 . For the year , we expect to grow volume by 5 to 10% year over our sales year , including a further shift in our geographic the mix towards United States .
Rory O'Donnell: For the year, we expect to grow our sales volume by 5% to 10% year-over-year, including a further shift in our geographic mix towards the United States. Currently, of our anticipated 2026 sales volume, we have approximately 65% committed in our order book following the completion of customer negotiations that occur in the Q4 of each year, which is tracking slightly ahead of where we were at this point last year. Specific to the Q1 of 2026, we'd expect a year-over-year increase in our sales volume of approximately 10%. In addition, we will continue to expand our initiatives to improve our cost structure. As we've noted, our cash cost per metric ton have declined by a cumulative 31% since the end of 2023.
Tim Flanagan: For the year, we expect to grow our sales volume by 5% to 10% year-over-year, including a further shift in our geographic mix towards the United States. Currently, of our anticipated 2026 sales volume, we have approximately 65% committed in our order book following the completion of customer negotiations that occur in the Q4 of each year, which is tracking slightly ahead of where we were at this point last year. Specific to the Q1 of 2026, we'd expect a year-over-year increase in our sales volume of approximately 10%. In addition, we will continue to expand our initiatives to improve our cost structure. As we've noted, our cash cost per metric ton have declined by a cumulative 31% since the end of 2023.
Speaker #2: Currently, of our anticipated 2026 sales volume, we have approximately 65% committed in our order book. Following the completion of customer negotiations that occur in the fourth quarter of each year, we are tracking slightly ahead of where we were at this point last year.
Speaker #2: Specific to the first quarter of 26 , we'd expect the year over year increase in our sales of volume approximately 10% . In addition , we continue to will expand our initiatives to improve our cost structure .
Speaker #2: we've noted , our As cash costs per metric ton have declined by a 31% since cumulative the end of 2023 . While this level of savings is not repeatable , by continuing to enhance the efficiency of our production and other measures to optimize production costs , we anticipate a low single digit percent year over year decline in our cash costs per metric ton for 2026 .
Rory O'Donnell: While this level of savings is not repeatable, by continuing to enhance the efficiency of our production and other measures to optimize production costs, we anticipate a low single-digit percent year-over-year decline in our cash costs per metric ton for 2026. Further, we'll continue to prudently manage our working capital levels and capital expenditures. For 2026, reflecting our anticipated volume growth, we expect a modest increase in our net working capital levels for the full year, most notably in the first half of the year, reflecting the timing of planned plant maintenance and other timing factors. Lastly, we anticipate our full-year 2026 capital expenditures will be approximately $35 million, which we believe is an adequate level to maintain our assets at current utilization levels.
Tim Flanagan: While this level of savings is not repeatable, by continuing to enhance the efficiency of our production and other measures to optimize production costs, we anticipate a low single-digit percent year-over-year decline in our cash costs per metric ton for 2026. Further, we'll continue to prudently manage our working capital levels and capital expenditures. For 2026, reflecting our anticipated volume growth, we expect a modest increase in our net working capital levels for the full year, most notably in the first half of the year, reflecting the timing of planned plant maintenance and other timing factors. Lastly, we anticipate our full-year 2026 capital expenditures will be approximately $35 million, which we believe is an adequate level to maintain our assets at current utilization levels.
Speaker #2: Further , we'll continue to prudently manage our working capital levels and capital expenditures for 2026 , reflecting our anticipated volume growth . We expect a modest increase in our net working capital levels for the full year .
Speaker #2: Most notably in the first half of the year , reflecting the timing of planned plant maintenance and other timing factors . Lastly , we anticipate our full year 2026 capital expenditures will be approximately $35 million , which we believe is an adequate level to maintain our at current utilization assets levels .
Rory O'Donnell: While much of our commentary today has been focused on near-term challenging market dynamics and our response, it's important to not lose sight of the fact that we participate in an industry that is mission-critical to electric arc furnace steel production with structural tailwinds that will support long-term demand growth. According to the most recent full-year data published by the World Steel Association, the EAF method of steelmaking further increased its market share in 2024, accounting for 51% of the steel production outside of China. This is a continuation of the steady share growth that the EAF industry has experienced for a number of years. And driven by decarbonization efforts, we expect this trend to continue.
Tim Flanagan: While much of our commentary today has been focused on near-term challenging market dynamics and our response, it's important to not lose sight of the fact that we participate in an industry that is mission-critical to electric arc furnace steel production with structural tailwinds that will support long-term demand growth. According to the most recent full-year data published by the World Steel Association, the EAF method of steelmaking further increased its market share in 2024, accounting for 51% of the steel production outside of China. This is a continuation of the steady share growth that the EAF industry has experienced for a number of years. And driven by decarbonization efforts, we expect this trend to continue.
Speaker #2: While much of our commentary today has been focused on near-term market challenges and dynamics in our response, it's important to not lose sight of the fact that we participate in an industry that is mission critical to electric arc furnace steel production, with structural tailwinds that will support long-term demand growth.
Speaker #2: In the most recent full year data published by the World Steel Association, the EAF method of steelmaking further increased its market share in 2024, accounting for 51% of steel production outside of China.
Speaker #2: This is a continuation of the steady share growth that the EAF industry has experienced for a number of years , and driven by decarbonization efforts , we expect this trend to continue in the US , which produces 80 million tons of steel annually , over 20 million tons of new EAF capacity as either recently come online or is planned for the coming years .
Rory O'Donnell: In the US, which produces 80 million tons of steel annually, over 20 million tons of new EAF capacity has either recently come online or is planned for the coming years, with further announcements expected as we move ahead. This will further drive share gains for the EAF steel production in this key region. In the EU, while some European steelmakers have announced temporary delays in their EAF transition plans, other projects continue to move forward. We continue to expect a meaningful shift towards EAF steelmaking within the EU in the medium to longer term. Given the expected growth in demand and tariff protections impacting certain foreign graphite electrode producers, the US and the EU remain important strategic regions for GrafTech for the long term.
Tim Flanagan: In the US, which produces 80 million tons of steel annually, over 20 million tons of new EAF capacity has either recently come online or is planned for the coming years, with further announcements expected as we move ahead. This will further drive share gains for the EAF steel production in this key region. In the EU, while some European steelmakers have announced temporary delays in their EAF transition plans, other projects continue to move forward. We continue to expect a meaningful shift towards EAF steelmaking within the EU in the medium to longer term. Given the expected growth in demand and tariff protections impacting certain foreign graphite electrode producers, the US and the EU remain important strategic regions for GrafTech for the long term.
Speaker #2: With further announcements expected as we move ahead for gains further drive share . will This EAF steel production in this key region in the EU .
Speaker #2: While some European steelmakers have announced temporary delays in their EAF transition plans, other projects continue to move forward, and we continue to expect the meaningful mix shift towards EAF steelmaking within the EU.
Speaker #2: In the medium to longer term . Given the expected growth in demand and tariff protections impacting certain foreign graphite electrode producers , the US and the EU remain important strategic regions for Graftech for the long term .
Rory O'Donnell: With our strong commercial momentum in these regions and our focus on meeting the evolving needs of our customers, we are well positioned to capitalize on this demand growth. Let me now briefly speak on the topic of trade, which continues to be an evolving landscape. We are continuously assessing a range of potential tariff outcomes and how those scenarios could influence steel industry trends and shape the commercial environment for graphite electrodes and, more broadly, synthetic graphite. Specific to the US, we continue to be encouraged by the steps the administration has taken to create a more level playing field from a trade perspective and to protect critical industries.
Tim Flanagan: With our strong commercial momentum in these regions and our focus on meeting the evolving needs of our customers, we are well positioned to capitalize on this demand growth. Let me now briefly speak on the topic of trade, which continues to be an evolving landscape. We are continuously assessing a range of potential tariff outcomes and how those scenarios could influence steel industry trends and shape the commercial environment for graphite electrodes and, more broadly, synthetic graphite. Specific to the US, we continue to be encouraged by the steps the administration has taken to create a more level playing field from a trade perspective and to protect critical industries.
Speaker #2: With our strong commercial momentum in these regions and our focus on meeting the evolving needs of our customers, we are well positioned to capitalize on this demand growth.
Speaker #2: Let me now briefly speak on the topic of trade, which continues to be an evolving landscape. We are continuously assessing a range of potential tariff outcomes and how those scenarios could influence steel industry trends and shape the commercial environment.
Speaker #2: For graphite electrodes, and more broadly, synthetic graphite, in the US, we continue to, specific to be, encouraged by the steps the administration has taken to create a more level playing field from a trade perspective and to protect critical industries as it relates to the steel industry.
Rory O'Donnell: As it relates to the steel industry, the expanded Section 232 tariffs that have been implemented on steel imports into the US continue to have the desired impact of higher domestic steel production and supporting manufacturing initiatives within the United States. With respect to critical minerals and, more importantly, synthetic graphite made from petroleum needle coke, steelmakers remain critically reliant on graphite electrodes and need a stable and healthy supply base. As noted, we expect to see growing demand in this market driven by the growth in EAF steelmaking and expect further synthetic graphite demand to result from the building of a Western supply chain for battery needs, whether for electric vehicles or energy storage applications. However, the establishment of those Western supply chains remains in early stages as this is an industry that is suffering from overcapacity in China.
Tim Flanagan: As it relates to the steel industry, the expanded Section 232 tariffs that have been implemented on steel imports into the US continue to have the desired impact of higher domestic steel production and supporting manufacturing initiatives within the United States. With respect to critical minerals and, more importantly, synthetic graphite made from petroleum needle coke, steelmakers remain critically reliant on graphite electrodes and need a stable and healthy supply base. As noted, we expect to see growing demand in this market driven by the growth in EAF steelmaking and expect further synthetic graphite demand to result from the building of a Western supply chain for battery needs, whether for electric vehicles or energy storage applications. However, the establishment of those Western supply chains remains in early stages as this is an industry that is suffering from overcapacity in China.
Speaker #2: The expanded Section 232 tariffs that have been implemented on steel imports into the U.S. continue to have the desired impact of higher domestic steel production and supporting manufacturing initiatives within the United States.
Speaker #2: With to critical minerals and more importantly , synthetic graphite made from petroleum needle coke , steelmakers remain critically reliant on graphite electrodes and need a stable and healthy supply base .
Speaker #2: As noted, we expect to see growing demand in this market driven by the growth in EAF steelmaking, and expect further synthetic graphite demand to result from the building of Western supply chain for battery needs, whether for electric vehicles or energy storage applications.
Speaker #2: However, the establishment chain's supply of those Western remains is still in the early stages and is suffering, as this industry is suffering from overcapacity in China.
Rory O'Donnell: We believe that the potential for international trade disruption further highlights the strategic importance of strengthening supply chains, and that the West is reducing its reliance on China for critical minerals such as synthetic graphite, and to accelerate the development of a domestic supply chain with the support of further policymaking. While additional policy measures are needed, we welcome the action of the U.S. Department of Commerce and the preliminary anti-dumping tariffs against graphite active anode material from China, along with recent announcements related to initiatives on the sourcing and pricing of rare earths and other critical minerals. All of this demonstrates a strategic intent on part of the U.S. government to foster an ex-China supply chain for these key materials.
Tim Flanagan: We believe that the potential for international trade disruption further highlights the strategic importance of strengthening supply chains, and that the West is reducing its reliance on China for critical minerals such as synthetic graphite, and to accelerate the development of a domestic supply chain with the support of further policymaking. While additional policy measures are needed, we welcome the action of the U.S. Department of Commerce and the preliminary anti-dumping tariffs against graphite active anode material from China, along with recent announcements related to initiatives on the sourcing and pricing of rare earths and other critical minerals. All of this demonstrates a strategic intent on part of the U.S. government to foster an ex-China supply chain for these key materials.
Speaker #2: We believe that the potential for international trade disruption further highlights the strategic importance of strengthening supply chains, and that the West reducing its reliance on China for critical minerals such as synthetic graphite, and to accelerate the development of a domestic supply chain with the support of further policymaking.
Speaker #2: While additional policy measures are needed, we welcome the action of the U.S. Department of Commerce and the preliminary anti-dumping tariffs against graphite active anode material from China, along with recent announcements related to initiatives on the sourcing and pricing of rare earths and other critical minerals.
Speaker #2: All of this demonstrates the strategic intent on the part of the US government to foster an ex-China supply chain for these key materials as it relates to GrafTech.
Rory O'Donnell: As it relates to GrafTech, given the fluid nature of global trade policy and the heightened attention on critical minerals, we are taking proactive measures that seek to, one, minimize the risk for GrafTech, two, capitalize on emerging opportunities, and lastly, promote fair trade in our key markets. All of this is consistent with our approach on advocating for ourselves in order to optimally position GrafTech and its stakeholders for long-term success. In closing, this is a pivotal time for GrafTech and our broader industry. Near-term demand fundamentals are beginning to improve, and long-term drivers, including decarbonization, the continued shift to EAF steelmaking, the growing demand for needle coke and synthetic graphite, are firmly in place.
Tim Flanagan: As it relates to GrafTech, given the fluid nature of global trade policy and the heightened attention on critical minerals, we are taking proactive measures that seek to, one, minimize the risk for GrafTech, two, capitalize on emerging opportunities, and lastly, promote fair trade in our key markets. All of this is consistent with our approach on advocating for ourselves in order to optimally position GrafTech and its stakeholders for long-term success. In closing, this is a pivotal time for GrafTech and our broader industry. Near-term demand fundamentals are beginning to improve, and long-term drivers, including decarbonization, the continued shift to EAF steelmaking, the growing demand for needle coke and synthetic graphite, are firmly in place.
Speaker #2: Given the nature of global trade policy fluid and the heightened critical attention on minerals , we are taking proactive seek to measures that one .
Speaker #2: the risk graftech to capitalize for on Minimize opportunities lastly , promote fair trade . And markets in our key . All of this consistent is with our on advocating for ourselves in order to Graftech in its optimally stakeholders term for long approach success .
Speaker #2: closing , this is a pivotal In time for position Graftech and our broader industry . Near-term demand fundamentals are beginning to improve , and long term drivers , including decarbonization continued shift to EAF steelmaking , the growing demand for needle coke and synthetic graphite are firmly in .
Rory O'Donnell: However, the supply side remains structurally out of balance, and the pricing environment remains inconsistent with the indispensable nature of graphite electrodes and the level of investment required to maintain a stable, reliable supply of graphite electrodes for the steel industry. As such, we must continue to operate with urgency, adaptability, and a willingness to make difficult decisions. To our stakeholders, we're committed to support our customers with dependable, high-quality electrodes, protecting the long-term viability of our business by identifying opportunities to enhance efficiencies and preserve optionality, being transparent about the challenges and decisions ahead, and ultimately positioning GrafTech for the long-term value creation by capitalizing on the structural trends that are set to shape the future of our industry. Lastly, I want to again thank our entire GrafTech team. Their dedication and resilience give me the confidence in our ability to navigate through this period and emerge stronger.
Tim Flanagan: However, the supply side remains structurally out of balance, and the pricing environment remains inconsistent with the indispensable nature of graphite electrodes and the level of investment required to maintain a stable, reliable supply of graphite electrodes for the steel industry. As such, we must continue to operate with urgency, adaptability, and a willingness to make difficult decisions. To our stakeholders, we're committed to support our customers with dependable, high-quality electrodes, protecting the long-term viability of our business by identifying opportunities to enhance efficiencies and preserve optionality, being transparent about the challenges and decisions ahead, and ultimately positioning GrafTech for the long-term value creation by capitalizing on the structural trends that are set to shape the future of our industry. Lastly, I want to again thank our entire GrafTech team. Their dedication and resilience give me the confidence in our ability to navigate through this period and emerge stronger.
Speaker #2: However , the supply side structurally remains out of balance , and the pricing remains environment inconsistent with the indispensable nature of graphite electrodes and the level of investment required to maintain stable , reliable supply of graphite electrodes for the industry .
Speaker #2: As must operate such , we with urgency , adaptability willingness to and a difficult to our make . stakeholders committed to support our customers with dependable , high electrodes , protecting the long term quality viability of our business by identifying opportunities to enhance efficiencies and preserve optionality .
Speaker #2: Being transparent about the challenges and decisions ahead , and ultimately graftech for the long term value creation by capitalizing on the structural trends that are set to shape position the future of our industry .
Speaker #2: Lastly, I want to again thank the entire GrafTech team. Their resilience gives me confidence in our ability to navigate through this period and emerge stronger.
Rory O'Donnell: That concludes our prepared remarks. With that, we'll now open the call for questions.
Tim Flanagan: That concludes our prepared remarks. With that, we'll now open the call for questions.
Speaker #2: That concludes our prepared remarks. With that, we'll now open for questions.
Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Bennett Moore with JPMorgan.
Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Bennett Moore with JPMorgan.
Speaker #1: time , I would everyone , in order to ask a question , press star . Then the number one on your telephone We'll pause for keypad .
Speaker #1: time , I would everyone , in order to ask a question , press star . Then the number one on your telephone We'll pause for like to At this just a moment to compile Q&A roster the .
Speaker #1: Your first question comes from Bennett Moore with J.P. Morgan.
Mike Dillon: Good morning, Tim and Rory. Thank you for taking my questions.
Bennett Moore: Good morning, Tim and Rory. Thank you for taking my questions.
Speaker #3: Good morning, Tim Murray. Thank you for taking my question.
Tim Flanagan: Morning, Bennett.
Tim Flanagan: Morning, Bennett.
Mike Dillon: You've highlighted continued aggressive competitor pricing. I'm just wondering if these dynamics have worsened at all, particularly in the US, and if so, is this being driven by imports or other local players?
Bennett Moore: You've highlighted continued aggressive competitor pricing. I'm just wondering if these dynamics have worsened at all, particularly in the US, and if so, is this being driven by imports or other local players?
Speaker #2: Morning , Bennett
Speaker #3: You've
Speaker #3: highlighted , you know , continued aggressive competitor pricing . I'm just questions dynamics have worsened at the US . And is this being driven by imports or other local .
Speaker #3: if so , ?
Tim Flanagan: Yeah. So I guess with respect to pricing and the commentary about the aggressive nature, I'm sure you can understand that we're not going to provide a ton of specifics around geographies and levels, or any specific names or actions. But I mean, at the end of the day, what we're seeing is across the globe pressure on pricing and behaviors that, when you take a step back and you think about what role electrodes play in the production of steel and the indispensable nature of electrodes in the production of steel, again, remember, you can't produce 70 million tons of steel in the US or 65 million tons of steel in Europe without an electrode. The level of pricing that people are quoting and behaving with in the market doesn't reflect the asset-intensive nature of our business.
Tim Flanagan: Yeah. So I guess with respect to pricing and the commentary about the aggressive nature, I'm sure you can understand that we're not going to provide a ton of specifics around geographies and levels, or any specific names or actions. But I mean, at the end of the day, what we're seeing is across the globe pressure on pricing and behaviors that, when you take a step back and you think about what role electrodes play in the production of steel and the indispensable nature of electrodes in the production of steel, again, remember, you can't produce 70 million tons of steel in the US or 65 million tons of steel in Europe without an electrode. The level of pricing that people are quoting and behaving with in the market doesn't reflect the asset-intensive nature of our business.
Speaker #2: Yeah . players So I guess with pricing and the about the aggressive nature , I'm sure understand that we're not going commentary provide a ton of to specifics around geographies and levels , and or any specific names or but actions , , I mean , at the end of day , the what we're seeing is across the globe , pressure on pricing and behaviors that you take a step know , when back and you , you think about what role electrodes play in the and the indispensable nature of electrodes in the production steel of production of .
Speaker #2: Again, remember, you can't produce 70 million tons of steel in the US, or 65 million tons of steel in Europe electrode.
Speaker #2: The level of pricing that people and with in the market quoting doesn't are nature . Asset intensive nature of our business . It doesn't incentivize R&D and spending , it behaving really doesn't reflect or allow for adequate returns to be generated for shareholders .
Tim Flanagan: It doesn't incentivize R&D spending, and it really doesn't reflect or allow for adequate returns to be generated for shareholders. So that's what we're seeing in the market, and I think that's problematic as we look out into the future.
Tim Flanagan: It doesn't incentivize R&D spending, and it really doesn't reflect or allow for adequate returns to be generated for shareholders. So that's what we're seeing in the market, and I think that's problematic as we look out into the future.
Speaker #2: So that's what we're seeing in the market. And I think that's problematic as we look out into the future.
Mike Dillon: Thanks for that color.
Bennett Moore: Thanks for that color.
Tim Flanagan: On the import side, sorry, sorry. Let me.
Tim Flanagan: On the import side, sorry, sorry. Let me.
Speaker #3: Thanks for that color .
Mike Dillon: Go ahead.
Bennett Moore: Go ahead.
Speaker #2: import The side . Sorry , sorry . Let me .
Tim Flanagan: Finish the second half of your question. Is it being driven by imports? I think it's being driven across the globe, so it's not specific to a particular region. Imports and certainly the amount of material that's coming out of China and India both at relatively low prices is certainly problematic across the globe. I think you're seeing some trade protections put in place in the US in particular, and now you're seeing actions taking place in Europe as well that will help with that. It's really just the amount of material that's being dumped into the market.
Tim Flanagan: Finish the second half of your question. Is it being driven by imports? I think it's being driven across the globe, so it's not specific to a particular region. Imports and certainly the amount of material that's coming out of China and India both at relatively low prices is certainly problematic across the globe. I think you're seeing some trade protections put in place in the US in particular, and now you're seeing actions taking place in Europe as well that will help with that. It's really just the amount of material that's being dumped into the market.
Speaker #3: Go ahead .
Speaker #2: The finish the second half of your question . And is it being driven by imports ? I think it's being driven , you know , across the globe .
Speaker #2: So it's region particular . You know , imports and you know , certainly amount of material that's a coming out of the China not and India , both at relatively low prices , is certainly problematic across the globe .
Speaker #2: I think you've seen some trade protections put in place in the US in particular, and now you're seeing actions taking place in Europe as well that will help with that, but it's really just the amount of material that's being dumped.
Speaker #2: market into the . But
Mike Dillon: Thanks for that, Tim. I guess just bringing those comments together, you've talked about expectations of improving demand, but that being more than offset by excess supply and competitive pricing. You've got 65% of your US book already locked in, which is the highest pricing. I mean, is it reasonable to assume that in 2026, realized pricing is at least going to be another directionally lower year for GrafTech?
Bennett Moore: Thanks for that, Tim. I guess just bringing those comments together, you've talked about expectations of improving demand, but that being more than offset by excess supply and competitive pricing. You've got 65% of your US book already locked in, which is the highest pricing. I mean, is it reasonable to assume that in 2026, realized pricing is at least going to be another directionally lower year for GrafTech?
Speaker #3: Thanks for Tim . And that , I guess bringing those comments together , you've talked about , you know , expectations of improving demand , but that being more than offset by excess just and competitive supply pricing , you've got 65% of your US book already locked in , which is the highest pricing means it reasonable to assume that in 2026 , realized pricing is at least going to be another directionally lower year for Graftech ?
Tim Flanagan: Yeah. And again, Bennett, thanks for the question. Sticking to our practice of not providing specific price guidance, I think it would be fair to say based on what we disclosed for 2025 and our commentary that we just provided around the state of the market, and to my answer to your previous question, I think it's fair to say that absolute pricing that we're observing thus far as we head into 2026 isn't better than what we're seeing at the 2025 level.
Tim Flanagan: Yeah. And again, Bennett, thanks for the question. Sticking to our practice of not providing specific price guidance, I think it would be fair to say based on what we disclosed for 2025 and our commentary that we just provided around the state of the market, and to my answer to your previous question, I think it's fair to say that absolute pricing that we're observing thus far as we head into 2026 isn't better than what we're seeing at the 2025 level.
Speaker #2: again , Yeah , question . You know , sticking to our practice of not providing specific price I think it would be fair to say , guidance , based we on what disclosed for and 2025 commentary , that we just provided around the our market state of the .
Speaker #2: And to my answer to your previous question , you know , I think it's it's fair to say that pricing that we're observing thus absolute far as we head into 26 isn't better than what we're seeing at the 25 level .
Mike Dillon: Understood. I'll get back in the queue. Thanks so much, and best of luck navigating these waters.
Bennett Moore: Understood. I'll get back in the queue. Thanks so much, and best of luck navigating these waters.
Speaker #3: Understood. I'll get back in the queue. Much and best thanks for navigating these waters.
Tim Flanagan: Thanks, Bennett.
Tim Flanagan: Thanks, Bennett.
Speaker #3: .
Speaker #2: Ben Thanks , .
Operator: Your next question comes from Arun Viswanathan with RBC.
Operator: Your next question comes from Arun Viswanathan with RBC.
Speaker #1: Your next question comes from Arun Viswanathan with RBC .
Tim Flanagan: Morning, Arun.
Tim Flanagan: Morning, Arun.
[Analyst] (RBC Capital Markets): Yeah. Thanks for taking my question. Hope you guys are well. Morning. Just on the pricing, so it sounds like you guys are being disciplined, and it sounds like some of the competition is bordering on not being disciplined and maybe even some irrational tactics. So it seems like there's been some capacity additions as well in India and China. For a very long time, I guess we've been under the impression that the quality of those electrodes were subpar, but it seems like there's a lot of customers who are now okay using those electrodes. So is that the case? And if that is the case, and you are walking away from some competitively priced dynamics, how do you win back share from here? So is it service? And because it doesn't seem like there's going to be any halt in that supply addition.
Arun Viswanathan: Yeah. Thanks for taking my question. Hope you guys are well. Morning. Just on the pricing, so it sounds like you guys are being disciplined, and it sounds like some of the competition is bordering on not being disciplined and maybe even some irrational tactics. So it seems like there's been some capacity additions as well in India and China. For a very long time, I guess we've been under the impression that the quality of those electrodes were subpar, but it seems like there's a lot of customers who are now okay using those electrodes. So is that the case? And if that is the case, and you are walking away from some competitively priced dynamics, how do you win back share from here? So is it service? And because it doesn't seem like there's going to be any halt in that supply addition.
Speaker #2: Good morning Yeah ,
Speaker #2: Arun .
Speaker #4: taking my thanks for question . Hope you guys are well . Good morning . Just on the pricing . So you know , it sounds like you guys are being disciplined and the like some of competition , you know , are is bordering not , you on know , disciplined .
Speaker #4: taking my thanks for question . Hope you guys are well . Good morning . Just on the pricing . So you know , it sounds like you guys are being disciplined and the like some of competition , you know , are is bordering not , you on know , disciplined . not being And maybe even some irrational So tactics .
Speaker #4: taking my thanks for question . Hope you guys are well . Good morning . Just on the pricing . So you know , it sounds like you guys are being disciplined and the like some of competition , you know , are is bordering not , you on know , disciplined . not being And maybe even some irrational it sounds know , seems like there's been it some capacity additions as well in India and China for a very long time .
Speaker #4: guess I we've been under the impression that , you know , the quality of electrodes were those subpar , but it seems like know , a lot of there's customers who are now , you know , okay , using those is that the electrodes .
Speaker #4: Is that the case? And if that is the case, are you walking away from some competitively priced dynamics? How do you win back share from here?
Speaker #4: So know , is it service , you and you know doesn't seem like there's going to be , because it any halt in that , you know , supply addition .
[Analyst] (RBC Capital Markets): And yeah, maybe you can just also discuss kind of the oncoming supply if you see any there. Thanks.
Arun Viswanathan: And yeah, maybe you can just also discuss kind of the oncoming supply if you see any there. Thanks.
Speaker #4: yeah , And can just also maybe you kind of the the discuss oncoming supply if you see any there . Thanks .
Tim Flanagan: Thanks, Arun. And as always, you've packed a lot into a single question, so hopefully, I can hit all the high points there. Let me start with supply, right? And we've talked about the oversupply that exists in the market. I don't think we've seen any incremental supply come on into the market here in 2025, but you've heard the announcements made by some producers that they intend to bring on additional capacity here over the next couple of years, which again, we've provided commentary and our thoughts on terms of the need for that in the market. So not additional supply in 2025, but certainly some announcements that aren't otherwise favorable.
Tim Flanagan: Thanks, Arun. And as always, you've packed a lot into a single question, so hopefully, I can hit all the high points there. Let me start with supply, right? And we've talked about the oversupply that exists in the market. I don't think we've seen any incremental supply come on into the market here in 2025, but you've heard the announcements made by some producers that they intend to bring on additional capacity here over the next couple of years, which again, we've provided commentary and our thoughts on terms of the need for that in the market. So not additional supply in 2025, but certainly some announcements that aren't otherwise favorable.
Speaker #2: Thanks , Arun . And always , as you've packed into a lot a single question . So hopefully I can hit all points the high there .
Speaker #2: You know , let me start with supply . we've talked Right . And about the oversupply that exists in the market . You know , we've seen any incremental supply .
Speaker #2: Come on I don't think in the into the market here in 2025 . But you've heard announcements made by some producers that they intend to bring on the additional capacity here over the next couple which again , we've years , provided commentary in our thoughts on on terms need for that of the in the market .
Speaker #2: So , so not additional supply in 25 , but but certainly some announcements that , you know , aren't otherwise favorable . You know , I think if you think about the overall pricing dynamics and we're where focusing our energies , we've stated that we will continue to focus our attention and moving volumes into the US market and to a lesser extent , the European market .
Tim Flanagan: I think if you think about the overall pricing dynamics and where we're focusing our energies, we've stated that we will continue to focus our attention and moving volumes into the US market and, to a lesser extent, the European market. This has been a commercial strategy we've talked about for the better part of a year and a half now, and we've had a lot of success. Again, we've seen tremendous growth in the US, and we'll continue to do that. We fully expect, as we head into 2026, to grow our volumes. We're guiding to a 5% to 10% increase in our volumes year-over-year, but that's being done with discipline. Again, we're not chasing volume for volume's sake.
Tim Flanagan: I think if you think about the overall pricing dynamics and where we're focusing our energies, we've stated that we will continue to focus our attention and moving volumes into the US market and, to a lesser extent, the European market. This has been a commercial strategy we've talked about for the better part of a year and a half now, and we've had a lot of success. Again, we've seen tremendous growth in the US, and we'll continue to do that. We fully expect, as we head into 2026, to grow our volumes. We're guiding to a 5% to 10% increase in our volumes year-over-year, but that's being done with discipline. Again, we're not chasing volume for volume's sake.
Speaker #2: This has been a commercial We've strategy . talked for about the better part of and a half and we've had a lot now , of success .
Speaker #2: Again, we've seen tremendous year-over-year growth in the US and will continue to do that. We fully expect, as we head into ’26, to grow our volumes.
Speaker #2: We're guiding to a 5 to 10% increase in our volumes year over year . But that's being done with discipline . Again , we're not chasing volume for volume sake , and certainly , as we stated around the the Q4 results , we have walked away and will continue to walk away from volumes that don't meet our objectives from a margin perspective that pressure is the greatest , we're .
Tim Flanagan: And certainly, as we stated around the Q4 results, we have walked away and we'll continue to walk away from volumes that don't meet our objectives from a margin perspective. Where that pressure is the greatest on us is certainly those regions outside of the US and Europe. And if you think about Southeast Asia, the Middle East, South America, those are regions where we have to be much more selective. To your point of how do we win market share, this really comes down to the value proposition we've talked about a lot here over the last two years and what the team continues to try to do in terms of improving our value proposition. Again, as the pure-play electrode player outside of India and China, we focus a lot of time on R&D, bringing new products.
Tim Flanagan: And certainly, as we stated around the Q4 results, we have walked away and we'll continue to walk away from volumes that don't meet our objectives from a margin perspective. Where that pressure is the greatest on us is certainly those regions outside of the US and Europe. And if you think about Southeast Asia, the Middle East, South America, those are regions where we have to be much more selective. To your point of how do we win market share, this really comes down to the value proposition we've talked about a lot here over the last two years and what the team continues to try to do in terms of improving our value proposition. Again, as the pure-play electrode player outside of India and China, we focus a lot of time on R&D, bringing new products.
Speaker #2: On on us is certainly those regions outside of the US and Europe . And , you know , if you think about Southeast Asia , the Middle East , South America , those are regions where we have to be much more selective point .
Speaker #2: of how do we To your win market share ? You know , this really comes down to the value proposition . We've talked about a lot here over the last two years , and what the team continues to improving our do try to value proposition .
Speaker #2: in terms of You know , again , as play electrode the pure player outside of India and China , we focus a lot of on R&D , bringing new products .
Tim Flanagan: We spend a lot of money and effort on our customer technical service teams and architecture and really look to partner with our customers and add value to their furnaces and their steelmaking processes. We think that, along with the quality of the electrodes we produce, certainly will continue to allow us to gain market share in those regions that value that. Regions where they're buying just purely on price, those are going to be the regions, again, we have to be much more selective and maybe don't have as much opportunity to grow our share.
Tim Flanagan: We spend a lot of money and effort on our customer technical service teams and architecture and really look to partner with our customers and add value to their furnaces and their steelmaking processes. We think that, along with the quality of the electrodes we produce, certainly will continue to allow us to gain market share in those regions that value that. Regions where they're buying just purely on price, those are going to be the regions, again, we have to be much more selective and maybe don't have as much opportunity to grow our share.
Speaker #2: We spend a lot of money and effort on our customer technical service teams and architects and really look to partner with customers and add value to their furnaces and their steelmaking. We think that, along with the quality of electrodes we process, this is important.
Speaker #2: Produce certainly will continue to allow us to gain market share in those regions that value that. Regions where they're buying just purely on price, those are going to be the regions.
Speaker #2: Again, we have to be much more selective, and maybe we don't have as much opportunity to grow our share.
[Analyst] (RBC Capital Markets): Okay. I appreciate that. And just as a follow-up, so you're also in the unique position where you have the backward integration into needle coke. And so theoretically, if the market is oversupplied, what is your ability to shift away from the graphite electrode market and repurpose your needle coke capacity into the EV battery side or ESS batteries? There's definitely very robust growth on that side. And is that something that you can pivot towards? And I know you've talked about it in the past, but is there a little heightened focus there and any timeline or any milestones that we can think about that you're pursuing? Thanks.
Arun Viswanathan: Okay. I appreciate that. And just as a follow-up, so you're also in the unique position where you have the backward integration into needle coke. And so theoretically, if the market is oversupplied, what is your ability to shift away from the graphite electrode market and repurpose your needle coke capacity into the EV battery side or ESS batteries? There's definitely very robust growth on that side. And is that something that you can pivot towards? And I know you've talked about it in the past, but is there a little heightened focus there and any timeline or any milestones that we can think about that you're pursuing? Thanks.
Speaker #4: I appreciate that . Okay , And just as a follow up , so , you know , you're also in the unique position where you have the backward integration into needle Coke .
Speaker #4: And so , theoretically , if the market is you know , oversupplied , what is your ability to shift away graphite from the electrode and market repurpose your , your needle coke capacity into , you know , the EV battery side or , you know , S batteries , you know , there's definitely very robust growth on that side .
Speaker #4: And , something that is that you can pivot towards ? And I know you've talked about it in the past , but is there is there a little heightened focus there ?
Speaker #4: And any timeline or milestones that we can think about that you're pursuing? Thanks.
Tim Flanagan: Yeah. Thanks for that. I would start by saying that there's a heightened focus on every element of our business, both our core business of producing and selling graphite electrodes, but also how we can become a more significant player in these establishment of supply chains outside of China for anode material, whether, again, like you just stated, going into energy storage applications or into EVs. I think we're well-positioned to do that with Seadrift. We've spent a lot of time in the past talking about our technical capabilities and our ongoing work with those looking to develop anode plants, both in the US and Europe. I think if you look at the trade landscape that continues to develop in Washington right now in particular, you've got an anode case that is rounding third and heading home in terms of finalization against the Chinese.
Tim Flanagan: Yeah. Thanks for that. I would start by saying that there's a heightened focus on every element of our business, both our core business of producing and selling graphite electrodes, but also how we can become a more significant player in these establishment of supply chains outside of China for anode material, whether, again, like you just stated, going into energy storage applications or into EVs. I think we're well-positioned to do that with Seadrift. We've spent a lot of time in the past talking about our technical capabilities and our ongoing work with those looking to develop anode plants, both in the US and Europe. I think if you look at the trade landscape that continues to develop in Washington right now in particular, you've got an anode case that is rounding third and heading home in terms of finalization against the Chinese.
Speaker #2: Yeah , thanks for that . And I would I would start by saying that there's a heightened focus on every element of our business , both our core business of producing and selling graphite electrodes , but also , you know , how we can become a more significant player in , these establishment of supply chains you know , outside of China for us anode material , whether , again , like as you stated , going into energy storage into think we're well or , I EVs positioned to applications do that with C , we've spent a lot of talking about past time in the our technical capabilities and our ongoing work with those looking to to develop anode plants , both in the US and Europe .
Speaker #2: And I think if you look at the trade landscape that continues to develop in Washington right now, in particular, you've got an anode case that is rounding third and heading home in terms of finalization against the Chinese.
Tim Flanagan: I think those hearings are here later in February and will be finalized in the month of March. Again, I think that's very constructive for the battery makers who are looking to establish and put plants in the US, and I think we'll be well-positioned to help them as they move forward. And I think more broadly, if you think about synthetic graphite and what the government's doing around price floors or pricing mechanisms, some recent announcements around the Vault and Stockpiles, all of this is, I think, a good parallel to what we can do on the synthetic graphite front. And again, I think we're well-positioned. We're just in the early innings of the development of some of these markets and some of this demand here in the US.
Tim Flanagan: I think those hearings are here later in February and will be finalized in the month of March. Again, I think that's very constructive for the battery makers who are looking to establish and put plants in the US, and I think we'll be well-positioned to help them as they move forward. And I think more broadly, if you think about synthetic graphite and what the government's doing around price floors or pricing mechanisms, some recent announcements around the Vault and Stockpiles, all of this is, I think, a good parallel to what we can do on the synthetic graphite front. And again, I think we're well-positioned. We're just in the early innings of the development of some of these markets and some of this demand here in the US.
Speaker #2: I think those hearings are here later in February and will be finalized in the month of March . Again , I think that's very constructive for us .
Speaker #2: The battery makers who are looking to to establish and put plants in the US . And I think we'll be well positioned to , to help them as they move forward .
Speaker #2: think more And I broadly , if you think about synthetic graphite and what the government's doing around price , floors or pricing mechanisms , some recent announcements around the vault and stockpiles , you know , all of this is , I to a good think , parallel what we can do on the synthetic graphite front .
Speaker #2: And , you again , I think know , we're well positioned . We're just in the early innings of the development of some of these markets and some of this demand here in the US .
[Analyst] (RBC Capital Markets): Okay. And then just lastly, given that you are in the early innings there, we've seen some price declines, and I know you're calling for a volume uplift, but understanding that it's still relatively low utilization rates globally at 67%, how much liquidity do you guys have to wade through this downturn from here? And then if conditions get worse, what are some of the plans? And then similarly, are you in a position to actually pursue that development from a financial standpoint, or is it going to depend on a stronger recovery?
Arun Viswanathan: Okay. And then just lastly, given that you are in the early innings there, we've seen some price declines, and I know you're calling for a volume uplift, but understanding that it's still relatively low utilization rates globally at 67%, how much liquidity do you guys have to wade through this downturn from here? And then if conditions get worse, what are some of the plans? And then similarly, are you in a position to actually pursue that development from a financial standpoint, or is it going to depend on a stronger recovery?
Speaker #4: Okay . And then just lastly , given that you are in the early innings , there , we do have , you know , we've seen some price declines .
Speaker #4: And I know you're calling for a volume uplift , but understanding that it's still a relatively low utilization rates globally at 67% , you know how much liquidity do you guys have to to wade through and the downturn ?
Speaker #4: You know , from here . And then , conditions get you know , if worse , you know , what are some of the plans .
Speaker #4: And then similarly , are you in a position to actually pursue that development from a financial standpoint or is it is it , you know that , is going to depend a stronger on recovery ?
Tim Flanagan: Yeah. Let me start with the last part of your question. I think we've been consistent all along as we've talked about our aspirations and the role that we can play in the establishment of the Western supply chains, right? This is not an area where GrafTech is going to be able to make multi-billion-dollar investments on a standalone basis, right? But we think that we possess a unique set of skill sets and assets and capabilities as a leader in synthetic graphite that allows us to partner with those that are out raising capital and building plants. And again, that can be in a number of areas within their own value chain, whether it's raw material supply out of Seadrift, providing graphitization capacity or expertise, or also just some of our own technological advancements that our R&D team has been working on.
Tim Flanagan: Yeah. Let me start with the last part of your question. I think we've been consistent all along as we've talked about our aspirations and the role that we can play in the establishment of the Western supply chains, right? This is not an area where GrafTech is going to be able to make multi-billion-dollar investments on a standalone basis, right? But we think that we possess a unique set of skill sets and assets and capabilities as a leader in synthetic graphite that allows us to partner with those that are out raising capital and building plants. And again, that can be in a number of areas within their own value chain, whether it's raw material supply out of Seadrift, providing graphitization capacity or expertise, or also just some of our own technological advancements that our R&D team has been working on.
Speaker #2: Let me—yeah, I'll start with your last part of the question. I think we've been consistent all along as we've talked about our aspirations and the role that we can play in the establishment of the Western supply chains.
Speaker #2: Right . This is not an area where Graftech is going to be able to make , you know , multibillion dollar investments on a on a standalone basis .
Speaker #2: Right. But we think that we possess a unique set of skill sets, assets, and capabilities as a leader in synthetic graphite that allows us to partner with those that are out raising capital and building plants.
Speaker #2: And again , that can be in a number of areas within their own value chain , whether it's raw material supply out of seadrift , providing graphitization capacity or expertise , or also just some of our own , you know , technological advancements that that R&D team has been working on .
Tim Flanagan: So it'll likely come in the form of a partnership or a series of partnerships as we think about how that develops for us going forward. You asked about liquidity and kind of what we're feeling or thinking about there. I mean, at the end of the day, we have $340 million of liquidity as of December 31. But I think more importantly is kind of our comments around as a company, over the last two years, we've acted decisively, right? We've taken a lot of steps to preserve our liquidity, to enhance our liquidity, right? You think back to the beginning of 2024, we idled some capacity. We streamlined our overhead structure. We readjusted our commercial structure. We've aggressively cut cost structure. We've aggressively cut costs and managed our balance sheet.
Tim Flanagan: So it'll likely come in the form of a partnership or a series of partnerships as we think about how that develops for us going forward. You asked about liquidity and kind of what we're feeling or thinking about there. I mean, at the end of the day, we have $340 million of liquidity as of December 31. But I think more importantly is kind of our comments around as a company, over the last two years, we've acted decisively, right? We've taken a lot of steps to preserve our liquidity, to enhance our liquidity, right? You think back to the beginning of 2024, we idled some capacity. We streamlined our overhead structure. We readjusted our commercial structure. We've aggressively cut cost structure. We've aggressively cut costs and managed our balance sheet.
Speaker #2: So it'll likely come in the form of a partnership, or a series of partnerships, as we think about how that develops for us going forward.
Speaker #2: You asked about liquidity and kind of what we are , what we're feeling or thinking about there . I mean , at the end of the day , we have we have $340 million of liquidity December 31st .
Speaker #2: But I as of think more importantly is , is kind of our comments around , you know , as a as a company over the last two years , we've acted decisively , right ?
Speaker #2: We've taken a lot of steps to preserve our liquidity , to enhance our liquidity . Right . You think back to the beginning of 24 , we idled some capacity .
Speaker #2: We streamlined our our overhead structure . We , you know , we readjusted our commercial structure . We aggressively court structure . We've aggressively court cut costs and managed our balance sheet .
Tim Flanagan: So all of those things are things that we'll continue to do and just need to reiterate to shareholders and stakeholders at large that we'll continue to take the actions necessary for as long as this downturn exists. That's the message here for today.
Tim Flanagan: So all of those things are things that we'll continue to do and just need to reiterate to shareholders and stakeholders at large that we'll continue to take the actions necessary for as long as this downturn exists. That's the message here for today.
Speaker #2: So all of are things that we will do, and just continue to need to reiterate to shareholders and stakeholders at large that we will continue to take the actions necessary for as long as this.
Speaker #2: downturn know , And , you exists that's that's the message here for today .
[Analyst] (RBC Capital Markets): Okay. Thanks.
Arun Viswanathan: Okay. Thanks.
Speaker #4: Okay . Thanks .
Operator: Your next question comes from Alex Blanda with Bank of America.
Operator: Your next question comes from Alex Blanda with Bank of America.
Speaker #1: Your next question comes from AB Landa with Bank of America.
[Analyst] (Bank of America): Good morning, Tim, Rory. Thank you for taking my questions. Maybe first one. You kind of alluded to this when talking about the US environment. Obviously, there had been some pretty significant Indian tariffs kind of through fourth quarter, and obviously, it's somewhat changed. I guess what was the impact of Indian tariffs on the US contracting overall process, and kind of how do you expect kind of the newly signed Indian trade deal to kind of impact the US market specifically?
Abe Landa: Good morning, Tim, Rory. Thank you for taking my questions. Maybe first one. You kind of alluded to this when talking about the US environment. Obviously, there had been some pretty significant Indian tariffs kind of through fourth quarter, and obviously, it's somewhat changed. I guess what was the impact of Indian tariffs on the US contracting overall process, and kind of how do you expect kind of the newly signed Indian trade deal to kind of impact the US market specifically?
Speaker #5: Good morning. Thank you for taking my questions. First one: maybe you kind of alluded to this when talking about the U.S. environment.
Speaker #5: Obviously, there had been some pretty significant Indian tariffs kind of through fourth quarter. And obviously, that has somewhat changed, I guess, was the...
Speaker #5: What impact do tariffs on Indian and U.S. trade have on the overall contracting process, and how do you expect the newly sized Indian trade deal to impact the U.S. market specifically?
Tim Flanagan: Yeah. I mean, if you think about the way that the US market tends to contract, either they go out in Q3 and Q4 and contract a sizable amount of their full-year volume for the next year. We are largely through that at this point in time. So while we think that the repealing of the 50% tariff against the Indians down to 18% is probably a step too far, we're comfortable with the position that we're in heading into 2026 with respect to our US customers. Again, fully anticipate overall volume growth for the business in 2026 and fully anticipate continuing to grow our US business. And again, if you think about the strength of the US steel market as it exists today and the operating levels where they're at, quality carries the day and service carries the day.
Tim Flanagan: Yeah. I mean, if you think about the way that the US market tends to contract, either they go out in Q3 and Q4 and contract a sizable amount of their full-year volume for the next year. We are largely through that at this point in time. So while we think that the repealing of the 50% tariff against the Indians down to 18% is probably a step too far, we're comfortable with the position that we're in heading into 2026 with respect to our US customers. Again, fully anticipate overall volume growth for the business in 2026 and fully anticipate continuing to grow our US business. And again, if you think about the strength of the US steel market as it exists today and the operating levels where they're at, quality carries the day and service carries the day.
Speaker #2: Yeah , I think about if you mean , the way that the that the US market tends to contract , you know , they go out in the fourth , third and fourth quarter and contract a sizable amount of their full year volume for for the next year .
Speaker #2: We are largely through that at this point in time . So while we think that the repealing of the the 50% tariff against the Indians down to 18% is probably a step too far , you know , we're we're comfortable with the position that in heading we're into 2026 with respect to our US Again , anticipate overall volume growth business for the 2026 and fully anticipate continuing to grow our US .
Speaker #2: And if, again, you think about the strength of the US steel market as it exists today, and the operators and where they're at, quality carries the day and service carries the day.
Tim Flanagan: We think that's what differentiates GrafTech from some of the competitors in the marketplace. And think that ultimately, that's why customers will choose us going forward. We'll continue to enhance that value proposition, and we're confident that we'll continue to be able to grow that market share as we look out into the future.
Tim Flanagan: We think that's what differentiates GrafTech from some of the competitors in the marketplace. And think that ultimately, that's why customers will choose us going forward. We'll continue to enhance that value proposition, and we're confident that we'll continue to be able to grow that market share as we look out into the future.
Speaker #2: And we think that ultimately, that's what differentiates GrafTech from some of the competitors in the marketplace. And we think that ultimately, that's why customers will choose us going forward.
[Analyst] (Bank of America): That's helpful commentary. Then maybe shifting regions to Europe. Kind of mentioned that volumes overall for the full year didn't hit your expectations and partially on aggressive pricing in Europe. I know there's been a number of capacity movements there, and obviously, you have two of your three main plants there. So I guess can you just kind of maybe discuss a little bit within Europe kind of the supply and demand environment and how that relates to what you're seeing in terms of pricing within Europe and early into 2026?
Abe Landa: That's helpful commentary. Then maybe shifting regions to Europe. Kind of mentioned that volumes overall for the full year didn't hit your expectations and partially on aggressive pricing in Europe. I know there's been a number of capacity movements there, and obviously, you have two of your three main plants there. So I guess can you just kind of maybe discuss a little bit within Europe kind of the supply and demand environment and how that relates to what you're seeing in terms of pricing within Europe and early into 2026?
Speaker #5: That's helpful commentary. And then maybe shifting regions to Europe—you mentioned that kind of volumes overall for the full year didn't hit your, and partially our, expectations.
Speaker #5: aggressive pricing in Europe . I know there's a number . There's been a number of like capacity there . And obviously you movements have two three main plants there .
Speaker #5: can you So I just kind bit within Europe of maybe kind of supply guess demand discuss a little and and how that environment of your relates to what you're seeing in terms of pricing within Europe and early into 26 ?
Tim Flanagan: Yeah. I mean, Europe still is and will remain a key market for us. If you just think about the amount of steel made via EAFs in Europe, while overall steel production was down in Europe year over year and is down 15% from the high in 2021, Europe is still a big steel-producing area, and given the proximity to our two plants in France and Spain, remains a key area for us. So I think the Europeans are finally starting to take some action on the trade front and the protectionism, if you want to call it that, with both CBOM and some of the announced tariff actions last quarter. But it's still a challenged market from an overall demand standpoint because of power pricing and just the overall level of competition. So again, it's a lower-priced market for us.
Tim Flanagan: Yeah. I mean, Europe still is and will remain a key market for us. If you just think about the amount of steel made via EAFs in Europe, while overall steel production was down in Europe year over year and is down 15% from the high in 2021, Europe is still a big steel-producing area, and given the proximity to our two plants in France and Spain, remains a key area for us. So I think the Europeans are finally starting to take some action on the trade front and the protectionism, if you want to call it that, with both CBOM and some of the announced tariff actions last quarter. But it's still a challenged market from an overall demand standpoint because of power pricing and just the overall level of competition. So again, it's a lower-priced market for us.
Speaker #2: Yeah , I mean , Europe still is . remain a key market for And will us . If you just think about the amount of steel made EAF in Europe via , you know , overall steel production was down in Europe down and is over year 15% from the high in 2021 , you know , a big producing And the while area .
Speaker #2: our two plants to in France and Spain , remains a area for So us . , you know , I think are finally starting some to take on the action front .
Speaker #2: The trade and protectionism, if you want to call it that, with both CBAM and some of the announced tariff actions Europeans took last quarter.
Speaker #2: still a But it's challenged market from an overall demand standpoint because of power pricing and and just the overall level of competition . So again , it's a it's a lower priced market for us .
Tim Flanagan: It's a market that we continue to focus our energies on. Again, the European buyers are also value buyers versus just price buyers. So I think the value proposition that I just spoke to, again, differentiates us in the market. And again, we think we're confident in our position in Europe, and we'll continue to push to grow volumes in Europe as well. I don't know if the pricing in Europe is any more aggressive than it is elsewhere in the world, but there certainly is some pressure there.
Tim Flanagan: It's a market that we continue to focus our energies on. Again, the European buyers are also value buyers versus just price buyers. So I think the value proposition that I just spoke to, again, differentiates us in the market. And again, we think we're confident in our position in Europe, and we'll continue to push to grow volumes in Europe as well. I don't know if the pricing in Europe is any more aggressive than it is elsewhere in the world, but there certainly is some pressure there.
Speaker #2: It's a market that we continue to focus our energies on . It . Again , the European buyers are also buyers value versus just price buyers .
Speaker #2: So I think value proposition that I just spoke the again to differentiates us in the market . And again , we think confident in position in our we're Europe and we'll to push volumes in Europe as to grow well don't know if the .
Speaker #2: Pricing in Europe is continuing elsewhere than it is in the world, but certainly there is some pressure. There is.
[Analyst] (Bank of America): Another question on it. You kind of alluded to China overcapacity kind of impacting, or their exports kind of impacting, the rest of the world. Obviously, always kind of tough to kind of get a good read on what's going on within China. But can you just maybe talk about what's going on with the supply picture of graphite electrodes coming out of China, what it looks like today, any future capacity they're looking to add, and what you're seeing in the export front from China?
Abe Landa: Another question on it. You kind of alluded to China overcapacity kind of impacting, or their exports kind of impacting, the rest of the world. Obviously, always kind of tough to kind of get a good read on what's going on within China. But can you just maybe talk about what's going on with the supply picture of graphite electrodes coming out of China, what it looks like today, any future capacity they're looking to add, and what you're seeing in the export front from China?
Speaker #5: You kind of alluded—another question to China overcapacity kind of impacting, or their kind of exports impacting the rest of the world. Always kind of tough to get a good read on what's going on within China.
Speaker #5: But , obviously , just talk about what's what's going on with the supply picture of graphite electrodes of coming out China , what today , any future it looks like capacity there add and looking to what you're seeing in the export front from China ?
Tim Flanagan: Yeah. Sure. And I think when you talk about China, you really have to talk about two elements of China and their export behavior. One is the headline, which is Chinese steel exports hitting over 120 million tons this year and flooding the world with steel, which just puts pressure on a lot of our customers around the globe. So that's one element of it. And you see a lot of trade action being taken in certain geographies to protect domestic steel, both in the US and EU, again, very important regions for us. On the electrode side, the Chinese continue to export at increasing levels on an annual basis. I'd say they're over 300,000 tons of UHP or 300,000 tons of total exports and somewhere in the 200 to 250 range of UHP exports here over the past year.
Tim Flanagan: Yeah. Sure. And I think when you talk about China, you really have to talk about two elements of China and their export behavior. One is the headline, which is Chinese steel exports hitting over 120 million tons this year and flooding the world with steel, which just puts pressure on a lot of our customers around the globe. So that's one element of it. And you see a lot of trade action being taken in certain geographies to protect domestic steel, both in the US and EU, again, very important regions for us. On the electrode side, the Chinese continue to export at increasing levels on an annual basis. I'd say they're over 300,000 tons of UHP or 300,000 tons of total exports and somewhere in the 200 to 250 range of UHP exports here over the past year.
Speaker #5: .
Speaker #2: Yeah, sure. And I think when you talk about China, you really have to talk about two elements of China. And they're export, their behavior.
Speaker #2: which is headline , Chinese steel exports hitting over year . 120 million tons this you flooding the know , world with steel , which just puts And , on pressure customers our around the globe , you know , so one element of it that's .
Speaker #2: And you see a lot of trade action being taken in certain geographies to domestic protect steel, both in the US and, again, importantly, the EU.
Speaker #2: US regions for on the electrode, Chinese know, the continue export increasing on levels on an annual basis. I'd say there are over 300,000 tons, or 300,000 tons of total exports.
Speaker #2: And , you know , somewhere in 2 to 250 range of us , up exports here over the past year . And they probably maybe represent , you know , a third of the the non-Chinese market right now in terms of total demand , you know , whether or not there's additional capacity coming online in China or not that given is kind of the irrelevant overall market , which is well , overbuilt for domestic what EAF their are .
Tim Flanagan: They probably represent maybe 1/3 of the non-Chinese market right now in terms of total demand. Whether or not there's additional capacity coming online in China or not is kind of irrelevant given the size of that overall market, which is well overbuilt for what their domestic EAF needs are, right? If you think about, China produces probably 90 million tons via the EAF, and they have probably 800,000 tons of electrode capacity. Most of that is idled or not exportable given its location or the quality, but there's a tremendous amount of volume there that sits in the market. So maybe that's a little bit of color in terms of where the Chinese are at. How much capacity more do they have to export? It's hard to say, but certainly, we feel the pressure of the Chinese exports globally right now.
Tim Flanagan: They probably represent maybe 1/3 of the non-Chinese market right now in terms of total demand. Whether or not there's additional capacity coming online in China or not is kind of irrelevant given the size of that overall market, which is well overbuilt for what their domestic EAF needs are, right? If you think about, China produces probably 90 million tons via the EAF, and they have probably 800,000 tons of electrode capacity. Most of that is idled or not exportable given its location or the quality, but there's a tremendous amount of volume there that sits in the market. So maybe that's a little bit of color in terms of where the Chinese are at. How much capacity more do they have to export? It's hard to say, but certainly, we feel the pressure of the Chinese exports globally right now.
Speaker #2: Right? If you think about it, China produces probably 90 million tons of EAF, and they have probably, via the 800,000 tons of electrode capacity.
Speaker #2: You know , most of that is idled or not exportable given its location or the But a tremendous amount of volume there that that sits in the So maybe that's a little bit of color in terms of , of where the Chinese are at , how much capacity do they have to You know , it's export ?
Speaker #2: there's
Speaker #2: Hard to say, but certainly we feel more pressure from the needs globally, right, especially on exports now.
[Analyst] (Bank of America): And then maybe last question, and thank you for taking the time. Maybe being a little bit more direct, but are you having conversations regarding Project Vault or any kind of related government-type support programs? And maybe can you quantify that opportunity within the synthetic graphite?
Abe Landa: And then maybe last question, and thank you for taking the time. Maybe being a little bit more direct, but are you having conversations regarding Project Vault or any kind of related government-type support programs? And maybe can you quantify that opportunity within the synthetic graphite?
Speaker #5: And then maybe last question, and thank you for taking the—maybe being a little bit more direct. But regarding time, have you had any conversations, project-related, Vault, or any kind of...
Speaker #5: And then maybe last question and thank you for taking the Maybe being a little bit more direct . But time . having are you conversations Project related Vault or any regarding kind of
Speaker #5: government type quality . market . support ? maybe can And you quantify that synthetic graphite ?
Tim Flanagan: Sure. Yeah. I'm not going to comment on any of the nature of discussions we're having. I think we've spoken in the past about, like any other company, government advocacy, whether at the state or federal level, is something that we engage in. We're not going to provide specifics around what departments and whom we're speaking to. But I can say that we continue to advocate for the benefit of GrafTech and the broader industry, and it really focuses around a number of areas: trade, promoting fair trade, and the importance of ensuring that domestic markets are strong. I think we've spent time educating various constituencies about the role that synthetic graphite as a critical mineral plays, both on the steel industry and the indispensable nature of a graphite electrode. That's not a linkage that everybody gets on the surface.
Tim Flanagan: Sure. Yeah. I'm not going to comment on any of the nature of discussions we're having. I think we've spoken in the past about, like any other company, government advocacy, whether at the state or federal level, is something that we engage in. We're not going to provide specifics around what departments and whom we're speaking to. But I can say that we continue to advocate for the benefit of GrafTech and the broader industry, and it really focuses around a number of areas: trade, promoting fair trade, and the importance of ensuring that domestic markets are strong. I think we've spent time educating various constituencies about the role that synthetic graphite as a critical mineral plays, both on the steel industry and the indispensable nature of a graphite electrode. That's not a linkage that everybody gets on the surface.
Speaker #2: Sure . Yeah . You know , I'm not comment on on any of the nature of discussions we're having . I think we've we've spoken in the past about , you know , like any other company , you know , government advocacy , whether at the state or federal level , is something that we engage in .
Speaker #2: And we're not going to provide specifics around what departments and whom we're speaking to . But I can say that , you know , we continue to advocate for the benefit of Graftech and the broader industry , and it really focuses around a number of areas trade and promoting fair trade and the importance of of of of that , ensuring you know , markets domestic are strong , I think you know , we've spent time we've educating various constituencies about the role that synthetic graphite has a mineral critical plays both on the steel industry and the indispensable nature of graphite That's not electrode .
Speaker #2: a linkage that that everybody on the gets surface . So we've spent some time explaining that to folks as well as , you know , synthetic graphite in the form of anode powder .
Tim Flanagan: So we've spent some time explaining that to folks, as well as synthetic graphite in the form of anode powder and the role that can be played there. So we'll continue to talk about who we are and what we do and our strengths relative to the market and what the needs are, but certainly think that this is an area that we'll continue to spend time on.
Tim Flanagan: So we've spent some time explaining that to folks, as well as synthetic graphite in the form of anode powder and the role that can be played there. So we'll continue to talk about who we are and what we do and our strengths relative to the market and what the needs are, but certainly think that this is an area that we'll continue to spend time on.
Speaker #2: And then that can be played there. So, continuing to roll that forward, to talk about who we are and what we do, and our strengths.
Speaker #2: You know, relative to the will market, what the needs are. But certainly think that this, that will, is an area we'll continue to spend time on.
[Analyst] (Bank of America): Thank you very much.
Abe Landa: Thank you very much.
Speaker #5: Thank you very much .
Operator: Your next question comes from Kirk Ludkey with Imperial Capital.
Operator: Your next question comes from Kirk Ludkey with Imperial Capital.
Speaker #1: Your next question comes from Kirk Ludtke with Imperial Capital.
[Analyst] (Bank of America): Hello, Tim. Rory, Mike, thank you for the call. You mentioned a couple of times that you thought quality and service carried the day. Are you able to price your products at a premium, or is it more that you win ties?
Kirk Ludtke: Hello, Tim. Rory, Mike, thank you for the call. You mentioned a couple of times that you thought quality and service carried the day. Are you able to price your products at a premium, or is it more that you win ties?
Speaker #6: Hello , Tim . Rory , Mike , thank you for the call . You mentioned a couple that you quality and thought service carry the Are day .
Speaker #6: Are you able to price products at a premium, or is it more that you win? Do you win ties?
Tim Flanagan: Yeah. I think it depends on the market. I mean, ultimately, right, we think that our value proposition is superior in a number of cases. And there are competitors that we would put on the same tier from a quality standpoint, and you price competitively against those, and you hope that your service and offerings are what breaks ties. There's still a quality and market differential between the tier two and tier three producers, both the Indians and the Chinese. But again, it depends on the end market, ultimately, that you're selling into. Certain markets are price buyers and only price buyers, and in those markets, you're head-to-head. And those aren't the markets that we want to focus our energies on.
Tim Flanagan: Yeah. I think it depends on the market. I mean, ultimately, right, we think that our value proposition is superior in a number of cases. And there are competitors that we would put on the same tier from a quality standpoint, and you price competitively against those, and you hope that your service and offerings are what breaks ties. There's still a quality and market differential between the tier two and tier three producers, both the Indians and the Chinese. But again, it depends on the end market, ultimately, that you're selling into. Certain markets are price buyers and only price buyers, and in those markets, you're head-to-head. And those aren't the markets that we want to focus our energies on.
Speaker #2: Yeah , I think it depends on the market . I mean , ultimately , right . We think that value proposition is , is superior in a our number of And and , you know , cases .
Speaker #2: There are competitors that we would put on the same tier as us from a quality standpoint. And you’re priced competitively against those.
Speaker #2: And you , you hope that your service and are what offerings ties breaks . still a There's quality and market differential between two and tier three the tier producers .
Speaker #2: Price buyers are buyers, and those head to markets that we price. Those aren't who we want to focus our head energies on.
[Analyst] (Bank of America): Got it. What percentage of the demand out there, I know this is probably a tough question to answer, but what percentage of the demand out there do you think is sensitive to quality and service?
Kirk Ludtke: Got it. What percentage of the demand out there, I know this is probably a tough question to answer, but what percentage of the demand out there do you think is sensitive to quality and service?
Speaker #6: Got it. What percentage of
Speaker #6: demand of the the out there I know this is a probably a tough question to but what answer , percentage demand out there of the do you think is is sensitive to to quality and and ?
Tim Flanagan: Well, I mean, at the end of the day, 100% of the demand is sensitive to quality, right? No steelmaker wants an electrode breaking in their furnace. It costs them money at the end of the day. The question is, how much are they willing to pay for the incremental quality? And that's a tough question to answer. But again, that is the underpinning of our commercial strategy and why we focused on the markets we're focusing on and willing to walk away from those folks that just demonstrate pure price buying in other regions.
Tim Flanagan: Well, I mean, at the end of the day, 100% of the demand is sensitive to quality, right? No steelmaker wants an electrode breaking in their furnace. It costs them money at the end of the day. The question is, how much are they willing to pay for the incremental quality? And that's a tough question to answer. But again, that is the underpinning of our commercial strategy and why we focused on the markets we're focusing on and willing to walk away from those folks that just demonstrate pure price buying in other regions.
Speaker #2: Well , I mean , at the end of the day , 100% of the demand is sensitive to quality , right ? No steel maker wants an electrode breaking in the furnace .
Speaker #2: It costs them money at the end of the day. The question is, are they willing to pay? How much are they willing to pay for the incremental quality?
Speaker #2: And that's a tough question to answer . But again , that that is the underpinning of our commercial strategy . And focused on the markets .
Speaker #2: We're—why we've been focusing on, and willing to walk away from, those folks that just demonstrate pure price buying in other regions.
[Analyst] (Bank of America): Got it. Thank you. On this $12 billion critical material fund, is that enough to move pricing in any of your end markets?
Kirk Ludtke: Got it. Thank you. On this $12 billion critical material fund, is that enough to move pricing in any of your end markets?
Speaker #6: Got it . Thank you . On this , this $12 billion critical Material Fund . Is is that enough to to move pricing in any of your end markets ?
Tim Flanagan: Yeah. I mean, I think it's hard to say, or maybe it's too early to say in terms of exactly how all these roll out. I mean, I think in the totality of whether it's the Vault, whether it's the initiatives that the Department of War is rolling out, whether it's the initiatives from the Department of Energy, whether it's what you see from some of the larger banks rolling out infrastructure and critical mineral funds, all of those things in totality and in a conscious effort towards the establishment of supply chains and creating a constructive environment, all of those will have a positive uplift. Which one has the bigger weighting or which one drives more of that across the board? It's tough to say.
Tim Flanagan: Yeah. I mean, I think it's hard to say, or maybe it's too early to say in terms of exactly how all these roll out. I mean, I think in the totality of whether it's the Vault, whether it's the initiatives that the Department of War is rolling out, whether it's the initiatives from the Department of Energy, whether it's what you see from some of the larger banks rolling out infrastructure and critical mineral funds, all of those things in totality and in a conscious effort towards the establishment of supply chains and creating a constructive environment, all of those will have a positive uplift. Which one has the bigger weighting or which one drives more of that across the board? It's tough to say.
Speaker #2: Yeah . I mean , I think it's it's or it's maybe it's early to say in terms hard to say of , of exactly how all these roll out .
Speaker #2: I mean , I think in the totality of whether too it's the vault , whether it's the , the initiatives that the Department of War is rolling out , whether it's the initiatives from the Department of Energy , whether it's what you see from some of the larger banks rolling out infrastructure and critical mineral funds , you know , all of those things .
Speaker #2: And, in totality and in a conscious effort towards the establishment of supply chains and creating a constructive environment, all of those will have a positive uplift.
Speaker #2: Which one has the bigger weighting, or which one drives more of that across the board? It's tough to know, I say.
Tim Flanagan: But I think we're happy to see from a market participant perspective that, A, that people are recognizing synthetic graphite as a critical mineral, B, that the government is taking action and decisive action and moving swiftly and not getting bogged down with bureaucracy and decision-making and really working towards establishing supply chains and supporting the domestic infrastructure.
Tim Flanagan: But I think we're happy to see from a market participant perspective that, A, that people are recognizing synthetic graphite as a critical mineral, B, that the government is taking action and decisive action and moving swiftly and not getting bogged down with bureaucracy and decision-making and really working towards establishing supply chains and supporting the domestic infrastructure.
Speaker #2: think But , you we're we're happy to see from a market participant perspective that we're that people are recognizing synthetic graphite as a critical mineral .
Speaker #2: B that the government is taking action decisive and moving action and swiftly and not getting with bogged down bureaucracy and and decision making and really working towards establishing supply chains and supporting the domestic infrastructure .
[Analyst] (Bank of America): Thank you. And then lastly, we talked a lot about capacity additions. Do you have any expectation that other competitors might reduce capacity?
Kirk Ludtke: Thank you. And then lastly, we talked a lot about capacity additions. Do you have any expectation that other competitors might reduce capacity?
Speaker #6: Thank you . And then lastly , we talked a lot about capacity additions . Are there any do you have any expectation that that your might reduce capacity , other competitors might reduce capacity ?
Tim Flanagan: Other than what you hear publicly, and that that's the same thing that we hear. So in terms of expectations, I'm not sure that there's anything that is pending in the market as we speak. But I think, broadly speaking, and part of our commentary was aimed at this, in a market that isn't rewarding producers for producing a product that is essential and allowing for investment in an asset-intensive industry and allowing for returns to shareholders, at some point in time, that logjam or that capacity surplus has got to come offline. People will start to make decisions based on that.
Tim Flanagan: Other than what you hear publicly, and that that's the same thing that we hear. So in terms of expectations, I'm not sure that there's anything that is pending in the market as we speak. But I think, broadly speaking, and part of our commentary was aimed at this, in a market that isn't rewarding producers for producing a product that is essential and allowing for investment in an asset-intensive industry and allowing for returns to shareholders, at some point in time, that logjam or that capacity surplus has got to come offline. People will start to make decisions based on that.
Speaker #2: You know , other than what what you hear publicly and that , you know that that's the same thing that we hear . So in terms of expectations , you know , I'm not sure that there's there's anything pending in the that is market as we speak .
Speaker #2: But I , I think broadly speaking , and part of our aimed at this commentary was in a , in a you know , that , isn't rewarding producers for producing a product that is essential and allowing for market that asset intensive industry and allowing for returns to you know , at some point in time shareholders , that logjam or that capacity surplus has got to come offline .
Speaker #2: People will start to make decisions based on that.
[Analyst] (Bank of America): Got it. I appreciate it. Thank you very much.
Kirk Ludtke: Got it. I appreciate it. Thank you very much.
Tim Flanagan: Thank you.
Tim Flanagan: Thank you.
Speaker #6: Got it. I appreciate it. Thank you very much.
Operator: There are no further questions at this time. I'll now turn the call back over to Tim Flanagan for closing remarks.
Operator: There are no further questions at this time. I'll now turn the call back over to Tim Flanagan for closing remarks.
Speaker #2: Thank you
Speaker #1: No further questions at this time. Much appreciated.
Speaker #1: I'll call back over to Tim Flanagan for closing remarks.
Tim Flanagan: Thank you, Carly. I'd like to thank everyone on this call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a wonderful day.
Tim Flanagan: Thank you, Carly. I'd like to thank everyone on this call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a wonderful day.
Speaker #2: Thank you, Carly, and.
Speaker #2: I'd like to There are everyone on thank for your interest in Graftech . And we look forward to speaking with you next quarter .
Speaker #2: Have a wonderful day .
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Speaker #1: That, gentlemen, concludes today's call. Thank you all for joining. Ladies and
