GrafTech International has disclosed plans to permanently shut down its graphite electrode manufacturing plant in Monterrey, Mexico.
The wind-down will take place in phases, with production scheduled for completion in the early part of the second quarter of 2027 (Q2 2027).
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GrafTech’s decision is aimed at adjusting manufacturing capacity in response to ongoing market challenges and structural overcapacity within the global graphite electrode sector.
The closure follows a period of market pressure attributed to excess production capacity worldwide, particularly in China and India, which has outpaced demand and contributed to increased exports into key regions.
GrafTech indicated that these market factors have weighed on graphite electrode pricing and industry returns in recent years.
The company intends to focus production on its larger European sites, transferring customer orders from Monterrey to its facilities in Calais, France and Pamplona, Spain.
After the closure, GrafTech’s annual graphite electrode production capacity is expected to decrease by approximately 51,000t, from 178,000t to roughly 127,000t.
The Monterrey closure will remove around 35,000t of capacity, while Pamplona’s output will be reduced by an additional 16,000t due to changes in its production mix, including the shift of pin stock production from Monterrey.
The company anticipates annual cash cost savings of $20–25m from the closure, along with a reduction in annual capital spending of approximately $5m from 2027.
GrafTech also expects to release $20–25m in working capital, primarily in 2028.
Estimated one-time costs related to the closure, mostly for severance, equipment relocation and other expenses, are also expected to total $20–25m by the end of 2027.
GrafTech CEO and president Timothy Flanagan said: “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.”
The Monterrey site shutdown and consolidation of manufacturing is expected to improve utilisation of its network, lower fixed operating costs and help strengthen its financial position.
The company will maintain a North American presence with operations in Seadrift, Texas, and at its electrode machining and distribution facility in St. Marys, Pennsylvania, although electrode production at St. Marys remains idled.
Following removal of graphite electrode production at Monterrey, the company aims to pursue the sale of the property, with any proceeds intended for liquidity and debt reduction.
