GrafTech International (NYSE:EAF) management said the company navigated what it called one of the most difficult backdrops the graphite electrode industry has faced in nearly a decade, pointing to global overcapacity, aggressive competitor pricing, geopolitical uncertainty, and subdued steel production trends in several regions. On the company’s fourth-quarter 2025 earnings call, executives emphasized volume growth and cost reductions in 2025, while warning that pricing pressure deteriorated late in the year and is expected to persist into 2026.
Industry backdrop: modest steel demand improvement, but oversupply drives pricing
Chief Executive Officer Tim Flanagan framed the near-term market challenge as primarily supply-driven rather than demand-driven. He cited World Steel Association data showing global steel production outside China of 843 million tons in 2025, up less than 1% year over year, with a global utilization rate of about 67%. In North America, steel production increased 1% for 2025, with U.S. output up 3%, while EU steel output fell 3% and remained well below 2021 levels. Flanagan estimated EU steel utilization averaged just over 60% in 2025.
Despite that demand outlook, Flanagan said the key issue remains oversupply, driven by capacity built in China and India and exports “flooding the markets” at low prices. He added that competitor pricing behavior has become “increasingly aggressive and arguably irrational,” contributing to industry realized price declines over the past few years. Management also said announced ex-China capacity rationalizations have been insufficient to address the structural imbalance.
2025 execution: U.S. mix shift, volume growth, and cost reductions
Flanagan said GrafTech’s 2025 priorities included growing volumes and market share while improving geographic mix by shifting toward higher-priced regions, particularly the U.S. On a full-year basis, the company increased sales volume by 6%, though he noted volume finished below the company’s most recent guidance range because GrafTech chose to “walk away” from business that did not meet margin requirements.
Executives highlighted the magnitude of the U.S. shift. Flanagan said U.S. sales volume rose 48% for the full year and was up 83% in the fourth quarter versus the prior year. Chief Financial Officer Rory O’Donnell added that U.S. shipments represented 31% of full-year 2025 sales volume, compared to 22% in the prior year, calling the growth notable given that U.S. steel production rose only 3% in 2025.
On costs, Flanagan said GrafTech reduced cash cost of goods sold per metric ton by 11% for the full year, bringing the cumulative reduction since the end of 2023 to 31%. Management attributed the improvements to procurement strategies, energy-efficiency work, disciplined production scheduling, and tariff impact management, without compromising quality, safety, or environmental commitments.
The company also pointed to safety performance: Flanagan said total recordable incident rate improved to 0.41 in 2025, which he described as the best on record.
Fourth-quarter results: pricing decline and negative EBITDA
O’Donnell reported fourth-quarter production volume of about 28,000 metric tons, corresponding to 60% capacity utilization. Full-year production was 112,000 metric tons with 63% utilization. Fourth-quarter sales volume was about 27,000 metric tons, flat year over year and below expectations. O’Donnell attributed the shortfall partly to shipment timing that moved into the first quarter of 2026, and partly to the company’s decision not to pursue certain lower-margin opportunities, particularly in the Middle East and Europe.
Average selling price in the fourth quarter was approximately $4,000 per metric ton, down 9% from the prior year and down 5% sequentially. O’Donnell said the year-over-year decline reflected the substantial completion in 2024 of higher-priced long-term agreements, while the sequential decline reflected competitive pricing dynamics.
Management said the U.S. mix helped offset some of the decline. O’Donnell estimated the higher mix of U.S. volume boosted the weighted average selling price by nearly $200 per metric ton in the fourth quarter and about $135 per metric ton for the full year.
Fourth-quarter cash costs were $4,019 per metric ton, down 2% year over year. O’Donnell noted quarterly fluctuations due to timing impacts and said the sequential increase versus earlier quarters was anticipated. Full-year cash costs were just over $3,800 per metric ton, down 11% year over year, exceeding prior guidance for a 10% decline. He reiterated a longer-term expectation of approximately $3,600 to $3,700 per metric ton.
GrafTech reported a fourth-quarter net loss of $65 million, or $2.50 per share, compared with a net loss of $49 million, or $1.92 per share, in the prior year. Adjusted EBITDA was negative $22 million, compared with negative $7 million in the prior-year quarter, as cost reductions only partially offset price declines.
Liquidity, cash flow, and balance sheet commentary
For the fourth quarter, cash used in operating activities was $21 million and adjusted free cash flow was negative $39 million. O’Donnell said results reflected semiannual interest payments of about $34 million in the second and fourth quarters and capital expenditures weighted to the fourth quarter, with $18 million of the $39 million full-year 2025 spend occurring in the quarter. He said these factors were partially offset by a favorable working-capital change.
The company ended 2025 with total liquidity of $340 million, consisting of $138 million of cash, $102 million of revolver availability, and $100 million available under a delayed draw term loan. O’Donnell said the remaining delayed draw term loan availability can be drawn until July 2026 and the company still expects to draw it. He also said there were no borrowings outstanding under the $225 million revolving credit facility, which matures in November 2028, though borrowing availability was limited by a springing covenant to roughly $115 million, less about $14 million in letters of credit. O’Donnell added that GrafTech does not face substantial debt maturities until December 2029.
2026 outlook: volume growth expected, pricing pressure persists
For 2026, Flanagan said GrafTech expects sales volume growth of 5% to 10% year over year, including a further shift toward the U.S. He said about 65% of anticipated 2026 sales volume is committed in the order book following annual customer negotiations that typically occur in the fourth quarter, which he said is slightly ahead of last year’s pace. For the first quarter of 2026, the company expects sales volume to increase about 10% year over year.
On costs, management said the magnitude of savings achieved since 2023 is not repeatable, but it expects a low single-digit percentage year-over-year decline in cash costs per metric ton in 2026. GrafTech also expects a modest increase in net working capital during 2026, most notably in the first half, due to planned plant maintenance timing and other factors. Capital expenditures are expected to be about $35 million in 2026, which Flanagan said is adequate to maintain assets at current utilization levels.
During the Q&A, Flanagan said pricing pressure is broad-based and driven in part by exports from China and India, even as trade protections emerge in the U.S. and Europe. Asked directly about the 2026 pricing direction, he declined to give price guidance but said it was fair to conclude that pricing observed heading into 2026 “isn’t better” than 2025 levels.
Flanagan also discussed longer-term demand tailwinds tied to electric arc furnace (EAF) steelmaking. He cited World Steel data indicating EAF accounted for 51% of steel production outside China in 2024 and said decarbonization is expected to support continued EAF share gains. He highlighted more than 20 million tons of new EAF capacity that has come online or is planned in the U.S. and said GrafTech is positioning around strategic regions such as the U.S. and EU.
On synthetic graphite and battery supply chains, Flanagan said GrafTech is focused on how it can support the development of ex-China supply chains and described the company as positioned to partner rather than make multi-billion-dollar standalone investments. He pointed to developments in U.S. trade policy, including preliminary anti-dumping tariffs on graphite active anode material from China and upcoming hearings referenced as occurring later in February with finalization expected in March, as constructive for domestic anode plant development.
Flanagan closed by reiterating that the company is evaluating multiple areas—including manufacturing footprint optimization, trade or policymaking support, potential strategic partnerships, and sources of capital—to preserve optionality and position the business for long-term value creation amid what he described as an unsustainably low pricing environment.
About GrafTech International (NYSE:EAF)
GrafTech International (NYSE: EAF) is a leading global manufacturer of graphite electrodes and other specialty graphite products used primarily in electric arc furnaces (EAFs) for steel production. The company’s core offerings include ultrahigh-power, high-power and regular power electrodes, along with related accessories such as graphite shapes and heterogeneous carbon materials. These products play a critical role in steelmaking by conducting the high electrical currents required to melt scrap steel efficiently and with reduced environmental impact compared to traditional blast furnace methods.
With a manufacturing footprint spanning North America, Europe and Asia, GrafTech serves steel producers and foundries worldwide.
