The ratings reflect Wilmington, Del.-based GrafTech International Ltd.'s significant exposure to cyclical steel markets, a very aggressive financial profile, and high raw-material costs. These risks are partly mitigated by GrafTech's leading market position as an efficient producer of graphite and carbon electrodes, and its global diversification of operations and customers. GrafTech benefits from its position as the world's largest producer in the concentrated graphite electrode industry, with an approximate 20% market share. Minimill steel producers use graphite electrodes in their electric arc furnace production process. The graphite electrode industry has high barriers to entry and has undergone significant consolidation over the past several years, with the top four producers accounting for over 50% of capacity. The company also manufactures other
