The ratings on Parma, Ohio-based GrafTech International Ltd. reflect the company's fair business risk profile, which its significant exposure to the cyclical steel industry, high degree of supplier concentration, and continued raw material cost pressures demonstrate. Still, the company maintains a good market position in graphite electrodes, has healthy margins, and an intermediate financial risk profile driven mainly by its very low book debt balances. GrafTech manufactures carbon-based materials for use in various industrial applications. The company's primary product, graphite electrodes, accounts for about 70% of its EBITDA. Because graphite electrodes are primarily used in electric arc furnaces (EAFs), the company is exposed to the cyclical steel industry, which can result in volatile performance and cash flows. The downturn in
