Graphite electrode producer GrafTech International plans to permanently close its manufacturing facility in Monterrey, Mexico, with production expected to end in early Q2 2027.
The closure is aimed at aligning the company’s manufacturing capacity with current market conditions amid persistent structural overcapacity in the global graphite electrode industry. GrafTech said capacity expansion in China and India has outpaced demand growth, while increased exports from the two countries have added to competitive pressure and weighed on graphite electrode prices and industry returns.
Following the closure, GrafTech will transfer customer requirements currently served by Monterrey to its larger manufacturing facilities in Calais, France, and Pamplona, Spain. Pin stock production currently carried out primarily in Monterrey will also be transitioned to Pamplona.
The closure will reduce GrafTech’s annual graphite electrode production capacity by approximately 51,000 tons, bringing total capacity to around 127,000 tons from 178,000 tons currently. This includes the closure of Monterrey’s 35,000-ton annual capacity and a 16,000-ton reduction at Pamplona as its production mix changes to support pin stock requirements.
GrafTech expects the move to generate annual cash cost savings of around USD 20-25 mln, with the full benefit expected from 2028. The company also expects annual capital expenditure requirements to decline by approximately USD 5 mln from 2027 and anticipates a one-time working capital release of around USD 20-25 mln.
The company expects total one-time cash costs of approximately USD 20-25 mln, mainly related to severance, employee-related expenses, equipment relocation and other closure costs.
GrafTech said it expects to maintain sufficient capacity to meet current customer requirements and anticipated future demand growth. Its North American operations will continue to include petroleum needle coke facilities in Seadrift, Texas, and an electrode machining and distribution facility in St. Marys, Pennsylvania.
GrafTech manufactures graphite electrodes used primarily in electric arc furnace steelmaking and the production of other ferrous and non-ferrous metals.