GrafTech Announces Planned Closure of Monterrey Graphite Electrode Facility

Strategic Action Aligns Manufacturing Capacity with Market Conditions, Reduces Costs and Strengthens Long-Term Competitiveness

Company Will Maintain Sufficient Capacity to Support Current Customer Demand and Benefit from Anticipated Demand Growth

BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)--GrafTech International Ltd. (NYSE: EAF) today announced its decision to permanently close its graphite electrode manufacturing facility in Monterrey, Mexico. The Company plans to wind down operations at the Monterrey facility in phases, with production expected to conclude early in the second quarter of 2027.

The planned closure is intended to better align the Company’s manufacturing capacity with current market conditions. The Company expects the planned closure to improve manufacturing utilization, reduce the Company’s cost structure and capital requirements, and concentrate production at GrafTech’s larger and more efficient manufacturing facilities, while preserving the product capabilities required to serve its customers.

The global graphite electrode industry continues to face significant structural overcapacity, driven in large part by substantial capacity expansion in China and India that has outpaced demand growth in those markets. Increased exports from those countries into key regions, including imports that are the subject of ongoing trade proceedings, have further contributed to the challenging competitive environment. These factors have weighed on graphite electrode pricing and industry returns for several years. While GrafTech and certain other industry participants have taken steps to reduce capacity, the Company believes that further supply discipline is necessary to support a healthier industry and a more sustainable supply-demand balance.

“Today’s announcement represents a disciplined and decisive action to support the long-term success of GrafTech,” said Timothy Flanagan, Chief Executive Officer and President. “Given the persistent imbalance between global graphite electrode supply and demand, maintaining underutilized capacity that requires ongoing capital investment is neither economically sustainable nor in the long-term interests of GrafTech or our stakeholders.”

“Following a comprehensive assessment of our manufacturing network, we determined that closing Monterrey provides the best combination of capacity alignment, operational reliability and sustainable cost improvement, while preserving the capabilities necessary to serve our customers,” continued Mr. Flanagan. “The closure of Monterrey is a difficult decision but is consistent with the strategy we have communicated to strengthen our competitive position, optimize our operational footprint and create greater long-term value. Importantly, this action builds on the broad set of initiatives we have implemented over the past several years, including cost reductions and capacity rationalization, and complements our previously announced pricing initiatives and our support for ongoing trade proceedings related to graphite electrode imports in key regions. We remain confident that these actions, taken together, will improve market conditions, enhance the effectiveness of our commercial strategy and strengthen GrafTech’s long-term competitive position.”

“We are deeply grateful to our Monterrey employees for their many years of dedication and service to GrafTech and our customers,” said Mr. Flanagan. “We recognize the significant impact this announcement will have on our team and we are committed to managing the transition with fairness, dignity and respect. As Monterrey continues to operate during the transition, maintaining safe and reliable operations will remain our highest priority.”

GrafTech expects to maintain sufficient production capacity to meet current customer requirements and support anticipated future demand growth. The Company intends to transition customer requirements currently served by Monterrey to its graphite electrode manufacturing facilities in Calais, France, and Pamplona, Spain, and will work closely with its customers who value GrafTech’s differentiated product and service offering to provide continuity of supply throughout and following the transition. GrafTech is transitioning pin stock production, which currently occurs primarily in Monterrey, to its Pamplona facility, which will have sufficient capability and capacity to support the Company’s pin stock requirements. The Company’s product quality, technical support and customer service will remain unchanged.

The Company will also maintain its North American presence through its vertically integrated petroleum needle coke operations in Seadrift, Texas and its St. Marys, Pennsylvania, electrode machining and distribution facility following the transition. While graphite electrode production at St. Marys was idled in 2024, and is expected to remain idled following this transition, St. Marys will continue to play a key role in developing GrafTech’s capabilities to serve the carbon and graphite needs of participants in the energy storage and battery space.

GrafTech expects the planned closure of its Monterrey facility to improve utilization across its manufacturing network, reduce fixed costs and ongoing capital expenditure requirements, release working capital and strengthen the Company’s long-term earnings and cash flow potential. The Company currently estimates that the closure will result in:

• A reduction in GrafTech’s annual graphite electrode production capacity of approximately 51 thousand metric tons, bringing annual production capacity to approximately 127 thousand metric tons from approximately 178 thousand metric tons currently, reflecting:
  • The closure of the Monterrey facility, which has approximately 35 thousand metric tons of annual graphite electrode capacity, and
  • An approximately 16 thousand metric ton reduction in the annual graphite electrode capacity of the Pamplona facility reflecting the change in its production mix to support the Company’s full pin stock requirements;
• Annual cash cost savings of approximately $20 million to $25 million, excluding the impact of one-time costs, with the full benefit expected to be realized in 2028;
• A reduction in annual capital expenditure requirements of approximately $5 million beginning in 2027, reflecting the Company’s reduced manufacturing footprint;
• A one-time release of working capital of approximately $20 to $25 million, with the majority of the benefit expected to be realized in 2028; and
• Total one-time cash costs of approximately $20 to $25 million, consisting primarily of severance and employee-related costs, equipment relocation costs and other facility closure expenses, with the majority of the cash expenditures expected to occur by the end of 2027.

The foregoing estimates are preliminary and reflect the Company’s current expectations regarding the direct financial impact of the announced actions. The Company expects the combination of improved manufacturing utilization, lower fixed costs, reduced capital requirements and working capital release to strengthen GrafTech’s long-term earnings and cash flow generation and its liquidity profile.

Following the completion of the wind-down and permanent removal of graphite electrode production capabilities at the site, GrafTech intends to pursue the sale of the Monterrey property. Any potential proceeds from a future sale are not included in the financial benefits described above, but would, however, be used to provide additional liquidity and reduce the Company’s existing debt as permitted under our credit agreements.

About GrafTech
GrafTech International Ltd. is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals. We believe the Company has a competitive portfolio of low-cost, ultra-high power graphite electrode manufacturing facilities, with some of the highest capacity facilities in the world. We are the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, our key raw material for graphite electrode manufacturing. This unique position provides us with a number of competitive advantages.

Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views with respect to, among other things, financial projections, plans and objectives of management for future operations, future economic performance and short-term and long-term liquidity. Examples of forward-looking statements include, among others, statements we make regarding the expected timing and execution of the closure of the Monterrey facility, anticipated cost savings, capital expenditure reductions, working capital release and one-time restructuring costs from the closure, including the timing of those costs and benefits, and the Company’s expected manufacturing footprint, product capabilities, production capacity and cost structure following the closure. You can identify these forward-looking statements by the use of forward-looking words such as “will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,” “expect,” “foresee,” “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,” “positioned to,” “are confident,” or the negative versions of those words or other comparable words. Any forward-looking statements contained in this press release are based upon our historical performance and on our current plans, estimates and expectations considering information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will be achieved. Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets. These forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements.

We believe that these factors include, but are not limited to: changes in market conditions, customer demand, the outcome of negotiations with employees, compliance with applicable legal and regulatory requirements, the timing and execution of the closure, including any delays in winding down operations, the Company’s ability to transition customer requirements and graphite electrode production from the Monterrey facility to our facilities in Calais, France and Pamplona, Spain after the closure, the Company’s ability to produce connecting pins at our facility located in Pamplona, Spain after the closure, our reliance on one facility in Pamplona, Spain for the manufacturing of connecting pins after the closure, the Company’s ability to obtain the estimated cost savings, capital expenditure reductions, working-capital release, and other benefits from the closure on the expected timing, or at all, and other factors described in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements except as required by law.