GrafTech International (EAF) Q2 2024 Earnings Call: Navigating the Graphite Electrode Market
GrafTech International (EAF) recently held its earnings call for the second quarter of 2024, and it was a mixed bag. The company is facing challenges in the graphite electrode industry, which is experiencing weak demand and high costs.
Key Takeaways
- GrafTech reported a 6% sequential improvement in Q2 2024 sales volume, but this was offset by lower pricing and a shift in business mix, resulting in a 26% year-over-year decline in net sales.
- Despite these challenges, GrafTech expects sales volume growth for the full year compared to 2023 and is focusing on cost reduction, safety, sustainability, and EV market initiatives.
- The company anticipates weak demand and pricing pressures to persist in the near term, but remains optimistic about long-term growth opportunities in the steel and EV markets.
GrafTech is actively managing its production capacity and working capital to mitigate the impact of current industry dynamics.
Bullish Highlights
GrafTech is making progress in its EV initiatives and plans to participate in the EV market’s demand for anode material. The company maintains a strong liquidity position with $232 million at the end of Q2 2024.
Bearish Highlights
The graphite electrode industry faces weak demand, low capacity utilization rates, and high costs per ton. A net loss of $15 million was reported in Q2 2024, and the company expects a sequential increase in costs in the second half of the year due to inventory write-downs, higher energy costs, and planned plant maintenance.
Long-Term Outlook
GrafTech is optimistic about the long-term growth opportunities in the steel and EV markets. The company expects sales volume growth for the full year compared to 2023. Long-term growth is expected to be driven by the rebound in the global steel market and the increasing adoption of electric arc furnace steelmaking.
GrafTech is strategically positioned to take advantage of the expected growth in electric arc furnace steel production and the electric vehicle market, despite the current challenges.
