GrafTech International Ltd. (EAF) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reveals several concerning factors: declining ASP, increased net loss, negative adjusted EBITDA, and unclear guidance on pricing for 2026. Although cost reductions and U.S. volume growth are positives, global pricing pressures and competition from China and India are significant challenges. The Q&A session highlights management's reluctance to provide specific guidance and uncertainty in market recovery. These factors, coupled with the lack of a market cap, suggest a negative sentiment with potential stock price decline in the short term.
Key Financial Performance
Sales Volume Increased by 6% year-over-year for the full year 2025. The growth was attributed to a strategic shift towards regions with stronger pricing fundamentals, particularly in the United States. However, the full-year volume finished below the most recent guidance range due to deliberate decisions to avoid low-margin opportunities.
U.S. Sales Volume Grew by 48% year-over-year for the full year 2025 and by 83% in the fourth quarter compared to the prior year. This growth was driven by a strategic focus on shifting business to the U.S., which remains the highest-priced region globally.
Cash Cost of Goods Sold (COGS) per Metric Ton Reduced by 11% year-over-year for the full year 2025, resulting in a cumulative reduction of 31% since the end of 2023. This was achieved through cost management initiatives such as enhanced procurement strategies, energy efficiency improvements, and disciplined production scheduling.
Liquidity Position Ended 2025 with $340 million, including $138 million in cash. This exceeded expectations and was supported by effective cost management, working capital management, and capital expenditure levels.
Total Recordable Incident Rate Improved to 0.41 in 2025, representing the best safety performance on record. This improvement reflects a strong focus on safety measures.
Global Steel Production (Outside China) Increased by less than 1% year-over-year to 843 million tons in 2025, with a global utilization rate of approximately 67%. The U.S. saw a 3% increase in steel production, while the EU experienced a 3% decline.
Average Selling Price (ASP) per Metric Ton Declined by 9% year-over-year in the fourth quarter of 2025 to approximately $4,000 per metric ton. The decline was due to the completion of higher-priced long-term agreements and competitive pricing dynamics. However, a higher mix of U.S. volume partially mitigated the impact.
Production Volume For the fourth quarter of 2025, production volume was approximately 28,000 metric tons, with a capacity utilization rate of 60%. For the full year, production volume was 112,000 metric tons, with a utilization rate of 63%.
Net Loss Reported a net loss of $65 million for the fourth quarter of 2025, compared to a net loss of $49 million in the prior year. The loss was driven by a decline in weighted average price, which was only partially offset by cost reductions.
Adjusted EBITDA Negative $22 million for the fourth quarter of 2025, compared to negative $7 million in the prior year. The decline was due to the same factors affecting net loss.
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Operating Highlights
Geographic Mix Shift: Sales volume in the U.S. grew 48% for the full year and 83% in Q4 compared to the prior year. The U.S. remains the highest-priced region globally, helping mitigate pricing pressures in other markets.
Steel Industry Trends: Global steel production outside China was up less than 1% in 2025. U.S. steel production grew 3%, while EU steel output decreased by 3%. World Steel projects 2026 steel demand growth of 3.5% globally and 1.8% in the U.S.
Trade Policies: Favorable trade policies, including Section 232 tariffs in the U.S. and the EU's carbon border adjustment mechanism, are expected to support higher steel production in these regions.
Cost Management: Achieved an 11% reduction in cash cost of goods sold per metric ton in 2025, with a cumulative reduction of 31% since 2023. Initiatives included enhanced procurement strategies, energy efficiency improvements, and disciplined production scheduling.
Liquidity Position: Ended 2025 with $340 million in liquidity, including $138 million in cash. This exceeded expectations and supports stability amid industry challenges.
Safety Performance: Achieved a total recordable incident rate of 0.41 in 2025, the best safety performance on record.
Strategic Priorities for 2026: Plans to grow sales volume by 5%-10% year-over-year, with a focus on the U.S. market. Approximately 65% of anticipated 2026 sales volume is already committed.
Supply-Side Challenges: The graphite electrode industry faces overcapacity issues, particularly from China and India, leading to aggressive pricing behavior. GrafTech is evaluating manufacturing footprint optimization, trade policy support, and strategic partnerships to address these challenges.
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Risk or Challenges
Global Overcapacity in Graphite Electrode Industry: The graphite electrode industry is facing significant global overcapacity, particularly due to additional capacity from China and India. This has led to a supply imbalance, aggressive competitor behavior, and unsustainably low pricing levels, threatening the long-term viability of the industry.
Geopolitical Uncertainty: Geopolitical factors are contributing to market instability, impacting the competitive landscape and supply chain dynamics.
Subdued Steel Production Trends: Steel production trends remain subdued in many regions, particularly in the EU, where steel output decreased by 3% in 2025 and utilization rates are well below global averages. This impacts demand for graphite electrodes.
Aggressive Competitor Pricing: Competitors are engaging in irrational and aggressive pricing behavior, further pressuring the market and creating challenges for maintaining sustainable pricing levels.
Tariff and Trade Policy Risks: The company faces risks related to tariffs and trade policies, which could impact cost structures and market dynamics. While some policies are favorable, the evolving trade landscape adds uncertainty.
Structural Supply-Side Imbalance: The supply-side imbalance in the graphite electrode market is not being adequately addressed by capacity rationalizations, leading to continued market instability.
Declining Average Selling Prices: The average selling price for graphite electrodes has declined significantly, with a 9% year-over-year drop in Q4 2025, impacting financial performance.
Production and Utilization Challenges: The company’s production volume and capacity utilization rates are relatively low, with a Q4 2025 utilization rate of 60%, reflecting challenges in aligning production with demand.
Economic and Market Volatility: Economic uncertainties and market volatility are affecting demand and pricing dynamics, making it challenging to forecast and plan effectively.
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Guidance & Outlook
Steel Demand Growth: World Steel projects 2026 steel demand to grow at 3.5% year-over-year globally outside of China. U.S. steel demand is expected to grow by 1.8%, while Europe is projected to see a 3.2% growth in steel demand.
Graphite Electrode Demand: Global demand for graphite electrodes is expected to increase slightly in 2026, with all major regions contributing to this growth.
Sales Volume Growth: GrafTech expects to grow its sales volume by 5% to 10% year-over-year in 2026, with a further shift in geographic mix towards the United States. Approximately 65% of anticipated 2026 sales volume is already committed.
Cost Structure Improvements: GrafTech anticipates a low single-digit percent year-over-year decline in cash costs per metric ton for 2026, building on a cumulative 31% reduction since 2023.
Capital Expenditures: Full-year 2026 capital expenditures are expected to be approximately $35 million, sufficient to maintain current asset utilization levels.
EAF Steelmaking Growth: The electric arc furnace (EAF) method of steelmaking is expected to continue gaining market share, driven by decarbonization efforts. Over 20 million tons of new EAF capacity is planned in the U.S. in the coming years.
Trade Policy and Tariffs: GrafTech is monitoring and adapting to evolving trade policies, including U.S. Section 232 tariffs and antidumping measures on graphite active anode material from China, which are expected to support domestic steel production and synthetic graphite demand.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Have competitive pricing dynamics worsened in the U.S., and is this driven by imports or local players?
A:Pricing pressures are global, not specific to the U.S. Imports, particularly from China and India at low prices, are problematic. Trade protections in the U.S. and Europe are helping to address this issue.
Q:Is it reasonable to assume that realized pricing in 2026 will be directionally lower for GrafTech?
A:Management did not provide specific price guidance but indicated that pricing observed for 2026 is not better than 2025 levels.
Q:How does GrafTech plan to win back market share given competitive pricing and capacity additions in India and China?
A:GrafTech focuses on its value proposition, including R&D, customer technical service, and high-quality electrodes. They aim to grow volumes in the U.S. and Europe while being selective in other regions. They expect a 5%-10% volume increase in 2026.
Q:Can GrafTech shift its needle coke capacity to the EV battery market, and what is the timeline for this?
A:GrafTech is exploring opportunities in the EV battery market and is well-positioned with its Seadrift facility. They are in early stages of development and are working with anode plant developers in the U.S. and Europe. No specific timeline was provided.
Q:How much liquidity does GrafTech have to navigate the downturn, and can they pursue development in synthetic graphite?
A:GrafTech has $340 million in liquidity as of December 31. They plan to pursue synthetic graphite development through partnerships rather than standalone investments.
Q:What was the impact of Indian tariffs on the U.S. contracting process, and how will the new trade deal affect the U.S. market?
A:The reduction of Indian tariffs from 50% to 18% is seen as excessive, but GrafTech is confident in its U.S. market position for 2026. They expect volume growth and believe quality and service will differentiate them.
Q:What is the supply and demand environment in Europe, and how does it affect pricing?
A:Europe remains a key market despite challenges like lower steel production and aggressive pricing. GrafTech focuses on value buyers in Europe and aims to grow volumes.
Q:What is the supply picture of graphite electrodes coming out of China?
A:China exports over 300,000 tons of graphite electrodes annually, with 200,000-250,000 tons being UHP. The market is overbuilt for domestic EAF needs, and Chinese exports put global pressure on pricing.
Q:Is GrafTech having discussions regarding government support programs like Project Vault?
A:GrafTech engages in government advocacy but did not provide specifics. They focus on promoting fair trade and the role of synthetic graphite in critical industries.
Q:Can GrafTech price its products at a premium due to quality and service?
A:It depends on the market. GrafTech competes on quality and service in value-driven markets but faces challenges in price-sensitive regions.
Q:What percentage of demand is sensitive to quality and service?
A:100% of demand is sensitive to quality, but willingness to pay for incremental quality varies by market.
Q:Will government initiatives like the $12 billion critical material fund impact pricing in GrafTech's markets?
A:It is too early to determine the impact, but government actions to establish supply chains and support domestic infrastructure are seen as positive.
Q:Are competitors expected to reduce capacity?
A:There are no immediate expectations of capacity reductions, but prolonged market pressures may lead to such decisions.
Q:Review of Unclear Management Responses
A:Management avoided providing specific price guidance for 2026 and did not disclose details about discussions with government programs like Project Vault.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Association North
CBAM beginning
China India
China World
China demand
China dynamic
Communications GrafTech
Cost area
EU average
EU decline
East Europe
Europe price
President Investor
Steel steel
Vice President
basis cash
behavior
competitor
cost ton
discipline
driver
efficiency
electrode industry
expectation portion
level demand
manufacturing footprint
opportunity margin
outlook steel
overcapacity
procurement
producer
quarter
reduction decline
shipment
stability
supply side
term value
ton reduction
value creation
volume decision
EAF Transcript
GrafTech International Ltd. (EAF) Q4 2025 Earnings Call Transcript
Unknown2-6
The earnings call reveals several concerning factors: declining ASP, increased net loss, negative adjusted EBITDA, and unclear guidance on pricing for 2026. Although cost reductions and U.S. volume growth are positives, global pricing pressures and competition from China and India are significant challenges. The Q&A session highlights management's reluctance to provide specific guidance and uncertainty in market recovery. These factors, coupled with the lack of a market cap, suggest a negative sentiment with potential stock price decline in the short term.
GrafTech International Ltd. (EAF) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call reveals strong financial performance, particularly in sales volume growth and cost reductions. The Q&A section indicates challenges in the electrode market, but optimism exists due to steel industry momentum and supportive tariffs. Despite flat pricing, the company's strategic market positioning and improved liquidity signal positive sentiment. The lack of new partnerships and cautious guidance are minor concerns, but overall, the positive financial metrics and strategic positioning outweigh these, suggesting a positive stock price movement.
GrafTech International Ltd. (EAF) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call reveals strong sales volume growth, particularly in the U.S., cost reductions, and a positive EBITDA turnaround. Despite a net loss, the company shows improved cash flow and strategic pricing. The Q&A highlights optimistic U.S. market demand and potential partnerships, despite some uncertainties. Overall, the strategic focus on profitable regions and improved financial metrics suggest a positive stock price movement.
GrafTech International Ltd. (NYSE:EAF) Q1 2025 Earnings Call Transcript
Unknown4-29
The earnings call reveals mixed signals: a slight EPS beat but a net loss, and negative EBITDA. Sales volume increased, but average selling price declined. The Q&A highlighted cautious optimism, but management avoided specifics. No shareholder return plans were announced, which may concern investors. Despite challenges like competitive pressures and regulatory issues, the company maintains liquidity and cost control. Given these factors, the stock is likely to stay neutral, with no significant catalysts for a strong move in either direction.
EAF Slides
EAF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
