GrafTech expects weak near term demand for graphite electrodes

Sees FY23 LTA revenue $245M-$255M and FY24 LTA revenue $100M-$135M. The company said, “We expect demand for graphite electrodes in the near term will remain weak, reflecting persistent softness in the commercial environment as steel industry production remains constrained by global economic uncertainty. As a result, sales volume in the fourth quarter of 2023 is expected to decline modestly compared to sales volume in the Q3 of 2023. We expect our cash cost of goods sold per MT in the Q4 of 2023 will be below the level recognized in the Q3 of 2023, but will be higher compared to the Q4 of 2022. As a result, for the FY23, we continue to expect a significant year-over-year increase in our cash cost of goods sold per MT as fixed costs are recognized over a smaller volume base, excess fixed costs that would have otherwise been inventoried are recognized when incurred due to reduced production levels and reflecting the full-year impact of higher raw material costs that increased throughout 2022. We continue to closely manage our operating costs and capital expenditures, as well as our working capital levels. ooking ahead, we remain confident in our ability to overcome near-term challenges and are optimistic about the long-term outlook for our business. We anticipate the steel industry’s accelerating efforts to decarbonize will lead to increased adoption of the electric arc furnace method of steelmaking, driving long-term demand growth for graphite electrodes. We also anticipate the demand for petroleum needle coke, the key raw material we use to produce graphite electrodes, to accelerate driven by its utilization in producing synthetic graphite for use in lithium-ion batteries for the growing electric vehicle market. We believe that the actions we are taking, supported by a distinct set of capabilities, including our substantial vertical integration into petroleum needle coke via our Seadrift facility, will optimally position GrafTech to benefit from these sustainable industry tailwinds.”