The US producer will wind down the Mexican plant in phases through early Q2 2027, shifting output and pin stock production to its European facilities in response to persistent global overcapacity.
GrafTech International Ltd. has announced its decision to permanently close its graphite electrode manufacturing facility in Monterrey, Mexico, in a move the company said is intended to better align its manufacturing capacity with current market conditions.
Operations at the site will be wound down in phases, with production expected to conclude early in the second quarter of 2027. Customer requirements currently served from Monterrey will be transitioned to the company’s graphite electrode facilities in Calais, France and Pamplona, Spain.
The graphite electrode industry, which supplies electric arc furnace steelmaking, has faced years of pricing pressure from structural overcapacity driven largely by expansion in China and India. The Monterrey closure is one of the larger capacity rationalisation moves by a Western producer in recent years, and GrafTech argues further supply discipline is needed to restore a sustainable supply-demand balance.
The Announcement
GrafTech said the closure is expected to improve manufacturing utilisation, reduce its cost structure and capital requirements, and concentrate production at its larger and more efficient facilities, while preserving the product capabilities required to serve its customers.
The company pointed to increased exports from China and India into key regions, including imports that are the subject of ongoing trade proceedings, as a further contributor to the challenging competitive environment. These factors, it said, have weighed on graphite electrode pricing and industry returns for several years.
The 51,000 tonne reduction in annual production capacity comprises two elements: the Monterrey facility itself, which has approximately 35,000 tonnes of annual graphite electrode capacity, and a 16,000 tonne reduction at Pamplona, reflecting a change in that facility’s production mix. Pamplona will take over pin stock production, which currently occurs primarily in Monterrey, and the company said the Spanish site will have sufficient capability and capacity to support its full pin stock requirements.
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 underutilized capacity that requires ongoing capital investment is neither economically sustainable nor in the long-term interests of GrafTech or our stakeholders. Timothy Flanagan, Chief Executive Officer and President, GrafTech International
Mr Flanagan said the decision followed a comprehensive assessment of the company’s manufacturing network, and acknowledged the significant impact on the Monterrey workforce, with GrafTech committing to manage the transition, in his words, with fairness, dignity and respect.
The Financial Impact
GrafTech provided preliminary estimates of the direct financial effects of the closure:
- Annual cash cost savings of US$20 million to US$25 million, excluding one-time costs, with the full benefit expected to be realised in 2028.
- A US$5 million reduction in annual capital expenditure beginning in 2027, reflecting the reduced manufacturing footprint.
- A one-time working capital release of US$20 million to US$25 million, with the majority expected in 2028.
- Total one-time cash costs of US$20 million to US$25 million, consisting primarily of severance and employee-related costs, equipment relocation and other facility closure expenses, with the majority of expenditure expected by the end of 2027.
Following the wind-down and permanent removal of graphite electrode production capability at the site, GrafTech intends to pursue a sale of the Monterrey property. Any proceeds are not included in the estimates above, but would be used to provide additional liquidity and reduce existing debt as permitted under the company’s credit agreements.
What Comes Next
- Monterrey continues to operate through a phased wind-down, with production expected to conclude early in Q2 2027.
- Customer volumes transition to Calais and Pamplona, with pin stock production consolidated at Pamplona.
- GrafTech pursues a sale of the Monterrey property once electrode production capability has been permanently removed.
The company said it will maintain its North American presence through its vertically integrated petroleum needle coke operations in Seadrift, Texas and its electrode machining and distribution facility in St. Marys, Pennsylvania. Graphite electrode production at St. Marys was idled in 2024 and is expected to remain idled, but GrafTech said the site will continue to play a key role in developing its capabilities to serve the carbon and graphite needs of participants in the energy storage and battery space.
Background
GrafTech International, which trades on the New York Stock Exchange under the symbol EAF, describes itself as a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals. It is the only large-scale graphite electrode producer substantially vertically integrated into petroleum needle coke, the key raw material for electrode manufacturing.
The Monterrey facility has a long history within the group. According to the company’s regulatory filings, the site has operated since 1959 and at one stage represented approximately 30% of GrafTech’s total annual production capacity. Operations there were temporarily suspended by Mexican state environmental authorities in late 2022 before being conditionally restored, an episode the company disclosed in its SEC filings at the time.
GrafTech noted that statements regarding the expected timing and execution of the closure, anticipated cost savings, capital expenditure reductions, working capital release and one-time restructuring costs are forward-looking, and that actual results may differ materially.
Primary source: GrafTech International Ltd., “GrafTech Announces Planned Closure of Monterrey Graphite Electrode Facility”, Business Wire, 31 August 2026 — view announcement.
Supporting references:
• GrafTech International corporate website — https://www.graftech.com/
• GrafTech International filings with the US Securities and Exchange Commission regarding the Monterrey facility, including Current Reports on Form 8-K (2022) and Quarterly Reports on Form 10-Q.
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