Good morning, ladies and gentlemen, and welcome to the GrafTech Second Quarter 2022 Earnings Conference Call and Webcast. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question-and-answer session. [Operator Instructions] This call is being recorded today, Friday, August 5th, 2022. I would now like to turn the conference over to Mike Dillon. Please go ahead, sir.

Thank you. Good morning, and welcome to GrafTech International's second quarter 2022 earnings call. On with me today are Marcel Kessler, Chief Executive Officer; Jeremy Halford, Chief Operating Officer; and Tim Flanagan, Chief Financial Officer. Marcel will begin with a few opening comments, after which Jeremy will discuss safety, sales and operational matters. Tim will review our quarterly results and other financial details. Marcel will close with comments on our outlook. We will then open the call to questions. Turning to our next slide. As a reminder, some of the matters discussed on this call may include forward-looking statements regarding, among other things, performance, trends and strategies. These statements are based on current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from those indicated by forward-looking statements are shown here. We will also discuss certain non-GAAP financial measures, and these slides include the relevant non-GAAP reconciliations. You find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website. I'll now turn the call over to Marcel.

Thank You, Mike. Good morning, everyone. Thank you for joining our second quarter earnings call. Starting on a personal note, I am excited to have joined GrafTech at this important time, and I am honored to have the opportunity to lead the company through its next phase of evolution. I was attracted to GrafTech because I see a set of distinctive assets and capabilities that give me confidence in our ability to deliver shareholder value over the long-term. I believe that we are well-positioned to participate in the growth of the graphite electrode market and have a promising foundation to potentially pursue other avenues of growth in the future. During my first few weeks at GrafTech, I've had the opportunity to get to know many of our associates and I'm very impressed by their level of know-how, energy and dedication. Turning to the second quarter. We are pleased to have delivered results in the period despite the challenges brought on by geopolitical conflict and economic uncertainty. Our ability to sustain key operating and financial metrics comparable to prior year levels is a testament to our operational execution and competitive advantages. I would like to thank the entire GrafTech team for their hard work. I will now turn the call over to Jeremy for an update on safety, sales and operational performance.

Thank you, Marcel and good morning, everyone. I'll start my comments with a brief update on health and safety excellence, which is a core value at GrafTech as people are our most important asset. We remain encouraged that our overall performance in this area continues to place us in the top quartile of operators in the broader manufacturing industry. However, our year-to-date reportable incident rate through the end of the second quarter compares unfavorably to the past two years, and we are not satisfied with this result. Going forward, we will continue to emphasize that safety must be fundamental to everything we do and that key safety initiatives must be prioritized. We will remain steadfast in working toward our ultimate goal of sending every employee home safely every day. Turning to slide five. Let me provide a few data points on second quarter steel industry performance as context for our results. Global steel production, excluding China, declined 6% in the second quarter compared to the same period in 2021. Commensurate with that lower production, global capacity utilization rates also declined, but remain in line with the industry average for the past several years. We are increasingly seeing diverging steel industry trends in different geographic regions. This includes softness in steel markets such as Western Europe, reflecting, among other things, the economic and supply chain impact of the conflict between Ukraine and Russia. Conversely, the U.S. steel market has shown more resilience as evidenced by utilization rates that remain elevated compared to the global industry. Turning to our second quarter performance, starting on slide six. Our second quarter production volume increased 1% year-over-year to 44,000 metric tons as our plants continue to operate at high levels of capacity utilization. We sold 42,000 metric tons of graphite electrodes in the quarter, representing…

Thanks Jeremy and good morning to everybody on the call. Net income totaled $115 million in the second quarter or $0.44 of earnings per share on both a GAAP and adjusted basis. Second quarter adjusted EBITDA was $158 million, a decrease of 1% compared to the second quarter of 2021, as higher year-over-year costs offset the increase in net sales. Adjusted EBITDA margin was 44% in the second quarter. Let me take a minute to expand briefly on our costs. With nearly all other industries, we continue to be impacted by global inflationary pressures, which is particularly acute in Europe, driven by higher energy prices. Specific to our business, the impacts are most significant for certain key raw materials, energy and freight. For the second quarter, we experienced a year-over-year increase of approximately 21% and recognize COGS per metric ton, excluding depreciation and amortization. This represented a 7% sequential increase compared to the first quarter of 2022. We expect sequential cost inflation to persist at a similar rate in the third quarter. That being said, we continue to focus prudently on managing our operating and discretionary spending, as we navigate the current inflationary environment. Turning to cash flow. In the second quarter, we generated $60 million of cash from operations and $48 million of adjusted free cash flow. Both measures decreased compared to the second quarter of 2021, reflecting higher working capital. This higher working capital was driven by an increase in inventory, reflecting both the cost impact I just spoke to, as well as higher quantities as production volume outpaced sales in the first half of 2022. Inventory builds occurred during the second quarter in advance of planned third quarter outages at our European electrode facilities and our Seadrift needle coke production facility. Also in anticipation of upcoming outages…

Thank you, Tim. As is the case for most manufacturing-based sectors at this point in time, the operating environment for the steel industry remains volatile. Global steel prices have retreated from recent highs and global steel production, excluding China, declined 6%, both in the second quarter and year-to-date compared to the same period in 2021. As Jeremy indicated, we continue to see diverging steel industry trends in different geographical regions, we're softening in certain markets such as Western Europe, while other markets such as the United States has been more resilient. For GrafTech, the near-term outlook is becoming more challenging with higher raw material, energy and logistics costs, as well as the impact of the ongoing conflict between Russia and Ukraine. At the same time, the shift in mix from LTA to non-LTA business continues. To get ahead of these near-term challenges, we continue to strengthen our commercial capabilities, prudently manage operating and capital expenditures, and we will continue to focus on reducing our long-term debt. We will also continue to invest in our product and service capabilities to be optimally positioned to participate in the longer term demand growth for graphite electrodes. We remain confident that the steel industry is accelerating efforts to decarbonize will lead to further growth in the electric arc furnace method of steelmaking, driving demand for graphite electrodes. To that point, announcements of planned EAF capacity additions by steel producers across the industry could result in annual incremental graphite electrode demand over 200 metric [ph] tons globally, excluding China, by 2030. As a leader in the graphite electrode industry, this supports our positive long-term outlook for our business. We also anticipate the demand for petroleum needle coke, a key raw material used to accelerate batteries for the growing [technical difficulty] petroleum needle coke as another positive long-term trend for our business as higher demand will result in continued rate of pricing for needle coke. Our vertical integration into petroleum needle coke production via our Seadrift's facility is foundational for our ability to reliably deliver high quality graphite electrodes. With these sustainable competitive advantages and the strong and committed team, we are confident in our ability to deliver shareholder value over the long-term. That concludes our prepared remarks. We will now open the call for questions.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from David Gagliano of BMO. Please go ahead.

Hi. Thanks for taking my questions. I just wanted to ask a few operational type of questions first, just a clarification on the near-term. First of all, on the pricing, I believe the commentary was comparable pricing in the spot market second half versus first half. I think historically or recent historically, the commentary was there's about a six to nine-month lead time obviously spot, but there's lead times associated with it. And the commentary was expectations for prices to continue to improve in the second half. So -- I believe -- so now the comment being flat, is that because more recent contracts being -- or volumes being signed or being signed at lower prices. Can you just give a little more color on the pricing dynamic that you're seeing right now in the spot market?

Yeah. Sure. Thanks Dave, and I appreciate your question. Really, a lot of this comes down to some macro factors, just given that the world economy has been pretty dynamic and there's a variety of market forces that work in different regions. And most notably, what's going on in the Ukraine/Russia situation and the impact that's having on energy prices, we're seeing things that are diverging regionally. And it's important to recognize that the anticipated pricing that we're talking about here is a global average. As we discussed in the remarks, we're seeing some continued resilience in certain regions and softness in others. And essentially, what's happening is that this softness is manifesting itself in a variety of different ways, including announcements by steelmakers, particularly those in Europe that they're avoiding operations during certain peak power times or they're extending their planned summer outages due to high power costs. And so these reduced operating rates are having the impact of increasing electrode inventory at certain customers, particularly in Europe, and consequently reducing demand in the short-term, ultimately applying some downward pressure on pricing in certain regions that is beyond what we had anticipated earlier. So, this has really limited some of the price escalation that we were previously anticipating. It's also worth noting that FX is playing a role here. As you know, we report in USD. And we've seen a pretty dramatic run-up in the value relative to the euro and the Japanese yen. And so, given that some of our sales are contracted in euro and yen, price increases that we anticipated on those sales in local currency don't necessarily report in -- don't translate into reported price increases on a USD basis. But having said that, I think it's important to note that this is a short-term impact. Over the medium term and long-term, we remain very bullish on our core markets. And we believe that the value proposition of the EAF process to help decarbonize. The steelmaking industry is undeniable, and that's being borne out in the various new EAF projects that have been announced globally for the coming years. As Marcel noted, we're monitoring over 150 new EAF projects in the time period through 2030, that will generate 200,000 tons of incremental electrode demand during that timeframe. And these new furnaces are going to require the latest and greatest in electrode technology, and we believe that our value proposition to support these high efficiency EAFs through our product technology, our -- and our ability to promise stability of supply through our vertical integration through Seadrift is really going to be shifting a lot of these market dynamics in our favor.

Okay. That's helpful. Thank you for that answer. And just to follow-up on the commentary, obviously, it sounds cautious in the near-term. Historically, GrafTech has been a leader at points in terms of meaningfully reducing volumes in a weaker demand environment. Considering the situation now, can you speak more specifically to second half -- or third quarter and second half volume expectations? How low will GrafTech take its volumes in the second half of this year?

Thanks Dave. Appreciate it. Yeah. As we talk about the second half of the year, certainly I think if we look at our contracted sales. We provided the guidance for the full year on the LTA volume. And obviously, we have to deliver against those volumes, and the order book is otherwise pretty full in the back half of the year on the non-LTA side as well. I guess, the question always becomes, and we've talked or alluded to in some of our commentary about the efforts to replace the impacted tons because of the conflict in the Ukraine, those have to come out in a profitable manner. So, as we look at the end of the year and certainly, the escalating costs in Europe, we're looking at those on an order-by-order basis to make sure that they're profitable. But as long as we continue to sell tons as profitable, we'll ship as many tons as we can in the back half of the year. And we'll -- from an operational standpoint, we'll continue to match our production to that sales demand, right? And make sure that we have sufficient graphite electrode inventories on-hand at the end of the year as we head into the first quarter of next year as well.

Okay. So, when you put all that together, what's reasonable? If I look back the last -- whatever back to 2018, 3Q is, specifically, volumes were below. Obviously, there's some challenging times there, but volumes went down to 32,000 tons in 2020, 39,000 last year. Is it reasonable to be within those two zones for 3Q, 32,000 to 39,000, somewhere in that band?

No, I would think we would expect certainly as we look to the back half of the year to be more in line with where we've been, not going down to the level that you quoted in 2018 or what we saw even last year.

Okay. That's helpful. Thank you. And then just one last one for me. Just on the longer term, we're getting closer, obviously, four months, five months away from the end of the -- from the meaningful wind down. And a market doesn't sound great. What's the updated thoughts on extending the LTAs? And is there actually any negotiations happening along those lines for 2023, 2024 and beyond.

Thank you for that question, Dave. It's Marcel here. So, maybe, first of all, it's important to point out that GrafTech has been providing graphite electrodes for a very long time before entering into any LTAs. So, I think, we're fully prepared to handle this change. Now, we continue to believe that there is a role that multi-year agreements will play in our portfolio. And they can be a win-win for our customers and for us, providing our customers with a hedging mechanism and surety of supply while locking in a portion of our cash flow. So, I think, as we move forward here, we will look to offer our customers a variety of contract terms tailored to their needs. Specifically to your question, so we have had discussions with some customers already, and we'd expect to have some new multi-year agreements in place by the end of this year and into next year. Now, in general, we would expect those new agreements to be based on the current market conditions at the time that they are that they're entered into, although we may consider a variety of pricing structures that suit the needs of both us and our customers. However, it is important to note that while we will continue to offer multi-year agreements as an important part of our commercialization strategy and value proposition, we do not anticipate that they will make up the majority of our portfolio moving forward.

Okay. That’s helpful. Thanks very much.

Thanks Dave.

Your next question comes from Curt Woodworth of Credit Suisse. Please go ahead.

Yeah. Thank you. Good morning.

Morning, Curt.

So, with respect to the third quarter, it seems like volumetrically, you're guiding roughly flattish and pricing basically the same on non-LTA. So, from a cost perspective, can you talk through how you see cost progression in the quarter? You talked about you're going to have an outage in your -- an outage at Seadrift, so I assume then you can have to buy in more third-party coke. And then you have inflationary pressures on top of that. And then, I would tend to assume that the merchant coke price would be going up sequentially as well. So, can you walk through some of those moving pieces just to help us get a little bit better gauge on the third quarter? Thank you.

Yeah. No, thanks, Curt, for that. And I think there's about six questions or points in there. But I would try to make sure I hit them all. So, as it relates to the outages, certainly, these are our planned activities. We take down our European operations annually, and this coincides with a lot of holiday periods for our folks over in Europe and we do a lot of maintenance and repair work during that time. And then, also Seadrift, we do a biannual turnaround and major maintenance activities down at Seadrift. So, in our prepared remarks, I commented on the inventory build that we had that was done twofold. One, to make sure we had the graphite electrode inventory to ship to our customers throughout the third quarter and not have any disruption in supply certainly. But then also making sure that we have sufficient needle coke on-hand as we continue to produce in the back half of the third quarter, if you will. So, a lot of that is already in our results and in our cash flows, if you will. And then we'll continue to work that down through the back half of the year. On the cost side, yeah, certainly, inflationary forces have impacted us and will continue to impact us. I think we're looking at sequential cost increase of roughly 7% in line with where we were Q1 to Q2. And it's really driven on a couple of key areas. First of all, European power price, right? Overall, energy is a relatively small piece of our overall portfolio of costs and we're largely fixed in Europe. For energy, we're at probably 80% fixed on the power side, 65% fixed on the gas side. But if you look at the volatility of the gas market in…

Great. Super helpful. And then, you made -- your comments on petroleum coke and kind of the interplay and the lithium-ion battery. I mean, there's a lot of debate, I think, around the ultimate mix of both the natural versus synthetic graphite component in the anode. And then even within the synthetic piece, the combination between petroleum coke or coal tar pitch coke. So, I just want to see, do you have a view on kind of the composition and the evolution of that market? Would you have any interest long-term in terms of getting into the merchant EV market, we obviously saw the deal that PSX announced with NOVONIX.

Yeah. So, happy to comment on that. As we think about the lithium-ion battery space, it's clear that this is going to be a huge driver of needle coke consumption as I think -- as I think you're aware. Regardless of the battery chemistry, when we talked about the cathode, whether it be lithium-ion phosphate or nickel manganese cobalt or whatever, in every case, the anode is graphite. And so within that, as we see the EV adoption continuing to increase, that's going to drive an increase in the amount of lithium-ion batteries that are sold. And the other thing that we're seeing is a continued growth in the megawatt hours of the batteries that are going into these EVs. And so, when we put all of that together, really what it's telling us is that between now and 2030, we expect about a 23% compound annual growth rate in the amount of synthetic graphite and consequently needle coke, that's being consumed in that market. So, it will be a meaningful driver of the underlying economics in the needle coke world. Whether or not we ultimately choose to participate in that space is something that we're exploring currently -- in kind of more to come on that. But to your point, Curt, the -- this is clearly a driver of needle coke and needle coke's consumption. And we think that, that is going to continue to be supportive of our value proposition as we go forward, and our competitors need to increasingly rely on -- pardon me -- rely exclusively on third-party sources of that needle coke whereas we will be able to offer our customers -- our electrode customers surety of supply given the -- given our vertical integration.

Great. Thank you very much. That’s all I have.

Your next question comes from Arun Viswanathan of RBC Capital Markets. Please go ahead.

Great. Thanks for taking my question. Yeah. Just picking up that last line of questioning and I guess kind of touching on something you said earlier as far as utilization rates. So, what is the capacity that GrafTech has to potentially dial back its own utilization rates? Where are you guys running, I guess, across your different facilities, across your system? And just curious, if you've made some conscious decisions to reduce rates in Europe? And then, also just given the reduction in steel utilization rates that you referenced, and then if so, would you be able to redirect some of that needle coke volume potentially into the EV market and potentially start that process. I'm sure you're early on in that exploration, but just want to get your thoughts on that. Thanks.

Okay. Yeah. So great question, and thanks, Arun. So, starting with a discussion about utilization rates in our factories in Europe, where our factories in general, as we've said historically, we've got about 200,000 tons of capacity that we could reasonably expect to have operating at 90% of capacity. And so that would say roughly 45,000 tons in a quarter. There's a little bit of seasonality to that. But given that we're going to take things down for a couple of weeks in the third quarter. So that would tell you that we're continuing to run our factories pretty hard right now in order to ensure that we protect our customers. As we go forward, we're continuously monitoring the underlying economics of running those factories and comparing those economics to our ability to command price on the selling side. And we'll make prudent decisions as this progresses, and we're selling incremental tons. And so -- fortunately, if we go back in time a little bit, we've really dialed up a lot of our focus on ESG initiatives and in particular, the environmental side of things. And so, we do have some things that we were doing to improve the energy efficiency of our facilities around the globe, but I'm talking specifically about Europe right now. And some of those investments that we were making primarily for environmental purposes, now command or now generate a pretty substantial economic return given the price of gas and where it's going. And so, as we think about how we run our factories and how we prioritize our business, we expect that as we look into the medium term, we will start seeing some benefit from investments that were initially made more for environmental reasons, will now be generating pretty strong financial results for us as well. Coming back around then to the -- your question about our ability to produce more needle coke in Seadrift and our ability to potentially get into the lithium-ion battery world, we -- I think we've said before that kind of the headline capacity at Seadrift is about 140,000 metric tons. And given that our internal consumption is meaningfully higher than that we do buy third-party coke from a variety of places. And so that does give us some strategic flexibility if we were to decide to get into that space to use some of our internal capacity to test that market, while continuing to utilize third-party sources for some of our internal usage as we carry that forward. So, I hope I touched on all points of your question, but happy to go deeper somewhere if you'd like.

Great. No, that was very helpful. And then, I guess, I also wanted to obviously get your thoughts on the markets in electrodes and needle coke as well. So, you noted that there's been some pullback in steel utilization rates causing some inventory build on the electrode side and some impact on pricing. How long do you think that will last? I mean, do you think we're kind of in the early stages of that, just given what's going on with demand and the macro side. And I guess, has it impacted needle coke as well? Could you just comment on where prices are in needle coke in the spot market? And if you see that also kind of in the early stages of that inventory build.

Well, I will -- it's Marcel here, Arun. Maybe one comment and I will pass back to Jeremy for the specifics on the needle coke, I think. Just reinforcing our earlier comments, right, we are currently in an operating environment that does remain very volatile. And while we remain optimistic about the long-term fundamentals of our business, there's near-term uncertainty in the broader market, is the reason why we will refrain from providing more specifics on our 2022 outlook at this time. But Jeremy, is there anything you want to add more specifically on the question for needle cock pricing?

Yeah. So, I think, what we've seen -- I think, Tim referenced that we've seen about a $300 run-up in third-party needle coke prices based on the import export statistics that we monitor. So, despite the softening of the market in certain regions of the world, we think that needle coke pricing is elevated compared to where it has historically been. But we think that as we look at the various factors that are going to affect it, we think that there's at least support for the current levels and likely room to grow even from where they're at right now. And so, essentially, what -- the way I would characterize it is that any demand slowdown that we're seeing on the graphite electrode side is being more than made up for on the lithium-ion battery side. And so, our anticipation is that we'll continue to see strength in the needle coke prices.

Great. Thanks. And then, I guess, the last question I had was just on -- in the needle coke market. Have you seen other electrode manufacturers using pitch needle coke to make ultra high performance electrodes? Just curious if there's any observations you've had maybe potentially with capacity in China or elsewhere? Has there been any innovation to make UHPs from pitch needle coke? And is that also causing extra supply in the market?

Yeah. So, another great question. I appreciate that. The -- as we look at our competitors and what they're doing, obviously, we're not inside their factory. So, we don't know for sure what they're doing with pitch based needle coke. What -- we ourselves have looked at this in the past as thinking about pitch based needle coke and have concluded that it was not suitable for us and our applications, primarily given some chemistry issues within it and what it would do to our processing times that would drive a significant amount of inefficiency in our manufacturing process to be able to make a UHP electrode using our process. It could certainly be done, but we don't think that it could be done in as efficient a manner as we're able to accomplish with petroleum based needle coke.

Perfect. Thanks a lot. I will turn it over.

Your next question comes from Alex Hacking of Citi Research. Please go ahead.

Yeah. Hi. Good morning. I have two or three follow-up questions, if that's okay. So, on the -- I guess, the cost side, the production side, are there meaningful cost differentials opening up between your production facilities in Europe and Monterrey. And is there a point where it sort of makes sense to shift your operating footprint a little bit, move volumes more towards North America, even consider reopening St. Mary's, or the cost differential is not that great.

Yeah. So, thanks, Alex. I appreciate that question. And I'll take the first part and then let Jeremy tackle the operating portfolio. Certainly, there are cost differentials between all of our sites, right, in terms of the regions we operate. North American energy prices are substantially lower than what we see in Europe right now. And even on a historic basis, North American natural gas is much cheaper than European natural gas, and you have labor differentials as well. At the end of the day, if you look at all of those, there's not a wide disparity in terms of our cost structure on average. But certainly, I would say right now, the European power pricing does pose unique challenge to those operations. Jeremy, I don't know if you want to talk about kind of the overall network.

Yeah. Yeah. So, Alex, as you would probably have anticipated given this difference that's opened up that Tim was talking about and some of the differences in steel utilization rates in North America versus Europe, we have substantially all of our lean and continuous improvement team. We have all of those resources focused on debottlenecking everywhere we can in North America, and Monterrey, obviously being a key driver of that. So, you're absolutely right that to the extent that we can continue to open up incremental capacity in Monterrey. That's where we have our resources focused on doing right now. As we -- in response to your question on St. Mary's, as you know, we've increased the amount of activity in the St. Mary's facility with the installation of the new machining line that complements the graphitization activities that were already taking place there. And I would point out that I'm actually quite pleased with the St. Mary's team and their performance on commissioning and ramping up that equipment, and they've demonstrated the ability to run that equipment at the design grade. And so, as we go forward, St. Mary's it is a location with plentiful access to reasonably priced energy, and that's a factor that we need to consider as we think about this. But at the moment, it remains just one more arrow in our strategic quiver if I could put it that way. Nothing to announce in terms of anything beyond that, but obviously something that we continue to keep in mind as we explore what we're going to do with the manufacturing footprint.

Okay. Thanks. And then, I just wanted to follow-up on your answer to Dave's question earlier on the LTA. So, I think, what you said was you are in discussion on LTAs with certain customers going to be a lot lower volume going forward. Would these LTAs be similar multi-year fixed price structure as the old ones were? And I mean, I guess, in terms of pricing, I'm not sure what you can say probably not much. But I guess, from my perspective, I'm not sure how attractive it would be to be fixing current spot prices for multiple years, given the volatility on the cost side. So, I guess, any more color on the LTA process. Thanks.

Yeah. Thanks for that. And I'll add to the comments Marcel provided earlier. Certainly, yeah, we do expect it to be a lower overall percentage of our portfolio. And Marcel commented on the fact that we've operated without LTAs in the past, right? And these are a good option for both us strategically, as well as our customers as they have certainty of supply. And I think over the last couple of years, we've seen enough supply disruptions that companies are looking for a little bit more of that certainty. But -- we don't have a gun to our head necessarily where we feel compelled that we have to load 50% of our order book or 80% of our order book with fixed price long-term agreements, right? We can be strategic about it, enter into those partnerships with those customers that I think there's a mutual value perceived out of those long-term relationships. And that's the way we're approaching it. And that's certainly the approach in the customers that we're having the discussions with currently, how they're viewing it as well. So, we look at these as a mutual benefit to both, but again, don't feel compelled to lock in at any price certainly. I think, as we look going forward, I think there's a variety of pricing structures that could be introduced under these agreements, whereby they may not look and feel like the original Gen 1, if you want to call them that, LTAs that were signed five years ago or so.

Okay. Thanks. Makes sense. And then just one final question, which was something that an investor asked me and it's kind of an interesting question. I wasn't quite sure the answer. I mean, obviously, you're not making needle coke from pitch. But for those that are, is the coal price provide relative -- some kind of relative cost support for that needle coke -- for the pitch needle coke, or it's not really relevant because it's a byproduct. Thanks.

Yeah. So, Alex, I would be speculating if I tried to answer that what's probably better if I don't. I apologize, but I don't know the answer to that, and I don't want to mislead you or somebody else.

Yeah. No worries. I appreciate the candor. All right. Thanks a lot for the question.

Thanks.

We have a follow-up question from Curt Woodworth of Credit Suisse. Please go ahead.

Yeah. Thanks. One of the questions that I had is that my understanding is a lot of these new electric parks that are under construction or planning stage, are going to utilize. And I think you kind of spoke to this, the larger size, more higher tech products, a lot in the 32-inch diameter. So, I was just wondering if you could kind of speak to your capability in the 32-inch size. And if all of the growth is coming in this kind of one particular product or the very large size diameter, how -- like how are you positioned for that? And then, can you speak to how tight that market is today? Thank you.

Yeah. Perfect. Thanks Curt. The -- as we see a lot of these high efficiency furnaces coming on, you're absolutely right that many of them are going with larger and larger graphite electrodes. The 32-inch market is still, in fact -- reasonably started, in fact, quite small and mostly focused just on a couple of applications here in the U.S. As we project out five, six or seven years, we'll see the 32-inch become more of a standard. Currently, what we're seeing is that the 30-inch or 750-millimeter depending on which side of the ocean you're on, is really the standard for super-sized electrodes. We're seeing a lot of 750s, even 700s are what we're seeing on a lot of the new furnaces. And as we think about those larger electrodes, that's really where a lot of our value proposition comes into place, as we think about the 700 and 750 that the market is really demanding of us right now. That's where we like that space, because that's where we have insulation from some of the more cost-oriented competitors and gives us an ability to sell our product on a value proposition basis where those customers value not just our product technology, but our technical service, as well as the surety of supply that we give them in those sizes. And so, you're exactly right that as we're seeing more conversions of mills going from the integrated steelmaking routes to electric arc furnace, the size of the electrodes is continuing to grow. The 800s or 32-inch that you're talking about is still a relatively small part of that market, but we'll grow as we progress through the balance of this decade, and we like our position on super-sized electrodes. Right now, as we think about the 700 and 750-millimeter electrodes, that's really where our primary focus is, given that, that's the heart of the market, and we'll be ready to spend more time on the 800s or 32-inch as that becomes a bigger part of the market.

Great. Thank you very much.

Thanks Curt.

There are no other questions from the phone lines. I would like to turn the conference back to Marcel Kessler for closing remarks.

Thank you, operator. I would like to thank everyone on this call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a great day.

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you for participating and ask that you please disconnect your lines.