NYSE-listed graphite electrode manufacturer GrafTech has announced the permanent closure of its Monterrey graphite electrode facility in Mexico.

The planned closure is intended to better align the company's manufacturing capacity with current market conditions.

GrafTech plans to wind down the Monterrey operation in phases, with production planned to conclude early in the second quarter of 2027.

The company expects the planned closure to reduce costs and capital requirements for the group, and concentrate production at GrafTech's larger and more efficient manufacturing sites, including those in France and Spain.

The Monterrey facility had 35 000 t/y of graphite electrode capacity. Graphite electrodes are primarily used as high-temperature conductive materials to melt and refine scrap steel in electric arc furnaces.

GrafTech CEO and president Timothy Flanagan says 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, Flanagan explains.

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. Given the persistent imbalance between global graphite electrode supply and demand, maintaining underutilised 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, GrafTech determined that closing Monterrey provides the best combination of capacity alignment, operational reliability and sustainable cost improvement, while preserving the capabilities necessary to serve customers.  

"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," Flanagan concludes.