GrafTech Posts $47m Q3 Loss as It Forecasts Higher Graphite Electrode Prices

GrafTech International reported a third-quarter 2026 net loss of $46.8 million as lower realised graphite electrode prices weighed on revenue and earnings, while the manufacturer forecast higher prices in the final quarter and into 2027.

TSeptember 2026, down 3% from $144 million in the same period a year earlier. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell to $8.6 million from $13 million, reflecting lower average realised prices, partly offset by a reduction in cash costs per metric tonhe US-based company recorded net sales of $140.2 million for the three months ended 30 ne.

GrafTech also reported negative adjusted free cash flow of $16.1 million and used $8.4 million in cash from operating activities during the quarter. The results underline the financial pressure facing the graphite electrode producer as it pursues pricing increases and restructures its manufacturing operations.

GrafTech expects graphite electrode prices to rise

GrafTech said its weighted-average realised graphite electrode price was approximately $3,900 per metric tonne in the third quarter, down 7% year on year but unchanged from the second quarter.

The company expects realised pricing to increase by a mid-single-digit percentage in the fourth quarter compared with Q3. It also anticipates meaningfully higher realised prices in 2027 as customer commitments secured at higher price levels begin to feed through into reported results.

Chief executive and president Timothy Flanagan said pricing trends across the company’s key commercial regions supported its view that realised pricing had reached an inflection point.

The outlook remains dependent on the implementation of price increases and the extent to which customers accept higher prices. In September, GrafTech announced a minimum 30% increase in graphite electrode prices for open commercial negotiations, building on a pricing action announced in March.

The company is also pursuing trade enforcement measures in key markets and initiatives to improve its product and customer mix. These measures are intended to address prolonged pricing pressure in an industry that GrafTech has described as facing structural overcapacity.

Monterrey closure expected to deliver $20m–$25m in annual savings

GrafTech is planning to close its graphite electrode manufacturing facility in Monterrey, Mexico, as part of a wider effort to reduce costs and align production capacity with market demand.

The company expects the phased wind-down to conclude in early Q2 2027. Customer requirements currently served by Monterrey will be transferred to its facilities in Calais, France, and Pamplona, Spain. Connecting pin production will also move to Pamplona.

The closure is expected to reduce annual graphite electrode production capacity from approximately 178,000 metric tonnes to 127,000 metric tonnes. GrafTech estimates annual cash cost savings of $20 million to $25 million, excluding one-off costs, with the full benefit expected in 2028.

The company recorded $14 million in restructuring and other exit charges in Q3, most of which it said were non-cash. The planned closure is therefore already affecting reported earnings, while the expected savings will take time to materialise.

GrafTech has also said the manufacturing changes should reduce annual capital expenditure requirements by approximately $5 million from 2027 and release $20 million to $25 million in working capital, with most of that benefit expected in 2028. These are company estimates rather than realised savings.

Sales volumes increase over nine months

Third-quarter sales volume was 28,800 metric tonnes, unchanged from the same period in 2025. For the first nine months of 2026, however, sales volume increased to 87,700 metric tonnes from 82,100 metric tonnes, a rise of approximately 7%.

Production volume reached 27,000 metric tonnes in Q3, compared with 26,600 metric tonnes a year earlier. Capacity utilisation was 64%, down from 74% in the second quarter but slightly above the 63% recorded in Q3 2025.

GrafTech continues to expect full-year 2026 graphite electrode sales volume to increase by 5%–10% year on year. It also expects production and sales volumes to be balanced across the full year, despite production exceeding sales during the first nine months.

The company forecasts a low-single-digit percentage decline in cash cost of goods sold per metric tonne for 2026 compared with 2025. It expects cost-reduction and efficiency measures to offset continued pressure from oil-based raw materials, energy and logistics.

Liquidity and debt remain important considerations

GrafTech had total liquidity of $242 million at 30 September 2026, comprising $134 million in cash and cash equivalents and $108 million available under its revolving credit facility.

Gross debt stood at $1.225 billion, while net debt was approximately $1.091 billion. The company reported that substantially no debt maturities were due until December 2029.

For the first nine months of 2026, GrafTech recorded a net loss of $130.5 million, compared with a loss of $154.7 million in the corresponding period of 2025. Adjusted EBITDA was negative $3 million, against positive adjusted EBITDA of $12.8 million a year earlier. Adjusted free cash flow was negative $118.7 million.

The company expects full-year capital expenditure of approximately $35 million and continues to anticipate a modest increase in working capital during 2026 to support higher sales volumes. It also expects working capital, including inventory, to decline in Q4 after the inventory build during the latest quarter.

Steel demand and pricing will shape the outlook

GrafTech expects modest growth in graphite electrode demand during 2026, supported by anticipated increases in steel demand outside China. The company pointed to a 6% rise in US steel production year to date through August, while European production was flat over the same period.

Graphite electrodes are used in electric arc furnace steelmaking, where electricity is used to melt scrap steel and other metallic inputs. Demand for the products is therefore linked to steel production levels, the mix of steelmaking technologies and the balance between industry supply and demand.

GrafTech’s near-term performance will depend on whether higher customer pricing translates into improved realised prices, while cost savings and manufacturing changes should be assessed against the costs of implementing the restructuring.

The company’s next financial results will provide further evidence of whether the expected Q4 pricing increase is materialising and whether its operational measures are improving profitability and cash generation.

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