Tokai Carbon Implements Reduction in Graphite Electrode Capacity in Japan and Europe

Tokai Carbon Co., Ltd. has announced a strategic decision as part of its ongoing structural reform within the graphite electrode business. Following deliberations at the Board of Directors meeting held on July 16, 2024, Tokai Carbon will undertake a reduction in annual graphite electrode production capacity in Japan and Europe, scaling down from 56 thousand tons to 32 thousand tons by July 2025. This capacity reduction plan involves consolidating production operations in Japan to the Hofu Plant in Hofu City, Yamaguchi Prefecture, while the Shiga Plant in Omihachiman City, Shiga Prefecture, will be placed in a state of temporary closure by the end of July 2025.

Tokai Carbon operates two production facilities in Japan (Shiga Plant and Hofu Plant) and has expanded its global footprint with acquisitions in Europe (TOKAI ERFTCARBON GmbH) and North America (TOKAI CARBON GE LLC), aimed at enhancing its graphite electrode business across three continents. However, amidst reduced demand due to sluggish global steel production and increased competition from lower-priced products originating from China and India, market conditions have sharply declined across Asia, Europe, and the Middle East. These challenges have precipitated a structural downturn in Tokai Carbon's graphite electrode business.

Given the prevailing circumstances, we have determined that reducing production capacity in both Japan and Europe is essential to maintain a reliable supply chain for our customers moving forward. To this end, we plan to consolidate our production operations at the Hofu Plant in Japan, with the Shiga Plant slated for closure by July 2025. This strategic decision aims to optimize operational efficiency and align our manufacturing capabilities with current market demands, ensuring that we can effectively meet customer needs while navigating the challenging dynamics impacting the graphite electrode sector globally.

In its three-year midterm management plan "T-2026" announced in February 2024, Tokai Carbon has prioritized "Strengthening the earnings power of core businesses" as its fundamental policy. Central to this strategy is the structural reform of its graphite electrode business, driven by the increasing global momentum towards carbon neutrality. Anticipating significant growth in graphite electrode demand, particularly for large-diameter products by 2030, Tokai Carbon aims to enhance its production capacity through restructuring. This initiative is designed to fundamentally reshape its business operations, improving competitiveness and enabling it to effectively meet the evolving demands of the North American, Asian, and European markets for large-diameter and high-quality graphite electrodes.

Tokai Carbon is undertaking significant restructuring measures to optimize its graphite electrode production capabilities across its global operations. In Japan, the Shiga Plant is slated for mothballing by the end of July 2025, with production activities consolidating into the Hofu Plant. This consolidation strategy aims to streamline operations, resulting in a 50% reduction in graphite electrode production capacity within Japan. Additionally, shipping capacity will decrease from 26,000 tons annually to 12,000 tons per year, aligning with Tokai Carbon's efforts to enhance operational efficiency and adaptability in response to market dynamics.

Meanwhile, in Europe, specifically at TOKAI ERFTCARBON GmbH in Germany, similar production consolidation initiatives are planned. By July 2025, the European site's graphite electrode production capacity will be scaled back by approximately 30%, reducing annual output from 30,000 tons to 20,000 tons. These strategic adjustments reflect Tokai Carbon's proactive approach to restructuring its global manufacturing footprint, aiming to improve competitiveness and better meet the evolving demands for graphite electrodes in key markets across Asia, Europe, and North America.