GrafTech International Ltd. Q4 FY2025 earnings call

Challenging Industry Environment

• Operating in a challenging graphite electrode industry marked by global overcapacity, aggressive competitor behavior, geopolitical uncertainty, and subdued steel production in many regions.

Volume and Market Share

• Full-year sales volume increased 6%; US sales volume grew 48% full-year and 83% in Q4.

Cost Management

• Achieved an 11% reduction in cash cost of goods sold per metric ton for the full year, with a cumulative 31% reduction since 2023 through initiatives like enhanced procurement, energy efficiency, and disciplined production scheduling.

Safety Performance

• Total recordable incident rate improved to 0.41 in 2025, the best on record.

Steel Industry Trends

• Global steel production outside China, World Steel's projections for 2026 steel demand, and supply side imbalance in graphite electrodes due to overcapacity in China and India flooding markets with cheap exports.

Full-year sales volume increased by 6%. In the fourth quarter, sales volume was approximately 27,000 metric tons, flat year-over-year. US sales volume grew 48% for the full year and 83% in the fourth quarter alone. Average selling price in the fourth quarter was approximately $4,000 per metric ton, a 9% decline year-over-year and 5% decline sequentially. For the full year, cash costs of goods sold per metric ton were reduced by 11%, with a cumulative 31% reduction since 2023. Fourth quarter cash costs per metric ton were $4,019, a 2% year-over-year decline.

Sales Volume

• Expect to grow sales volume by 5% to 10% year-over-year in 2026, with ~65% of 2026 sales volume committed in the order book.

Cash Costs

• Anticipate low single-digit percent year-over-year decline in cash costs per metric ton in 2026.

Capital Expenditures

• Expect full-year 2026 capital expenditures to be approximately $35 million.

• Supply side imbalance: Gross overcapacity in China and India leading to cheap exports distorting the competitive landscape.
• Aggressive pricing behavior: Competitors' irrational pricing threatening supply chain stability.
• Geopolitical uncertainty: Impact on steel production and graphite electrode pricing.

Q: Bennett Moore asked about aggressive competitor pricing and whether it's driven by imports, and if realized pricing will be lower in 2026.

A: Timothy Flanagan responded that pricing is problematic, driven by global imports, and absolute pricing in 2026 isn't better than 2025 levels.

Q: Arun Viswanathan asked about shifting needle coke capacity to EV battery side and pivotability.

A: Timothy Flanagan stated there's a heightened focus on all business elements, including potential partnerships in anode material for EVs and energy storage, and GrafTech is well-positioned to partner with battery makers.

Q: Abe Landa asked about impact of Indian tariffs on US contracting and European volumes.

A: Timothy Flanagan mentioned US market contracting is largely done, comfortable with US position for 2026, and Europe is a key market but faces demand challenges and pricing pressure.

Q: Kirk Ludtke asked about percentage of demand sensitive to quality and service, and impact of $12 billion critical material fund.

A: Timothy Flanagan said 100% of demand is sensitive to quality, but tough to quantify how much, and the critical material fund initiatives will have a positive uplift but it's too early to say exact impact.