GrafTech heads into its third-quarter report with a story that has improved faster than its financials. Last quarter management traded the grim language of late 2025 for a far more confident message: steel demand is firming across regions, a price increase is holding, and trade protection is arriving on both sides of the Atlantic. The catch is timing. Nearly all of this year's volume was locked in at fourth-quarter 2025 prices, so the good news is largely a 2027 event. That leaves this report to answer a narrower question: can the company stretch its shrinking cushion of cash long enough to collect?
The Street is not expecting much. Consensus calls for a loss of $1.46 a share on revenue of about $126.6 million, essentially a repeat of the second quarter's $1.47 loss on $127.4 million. Against last year, that is clear contraction: revenue is expected to fall roughly 12% and the loss to deepen by about 42% from the $1.03 posted a year ago. With no fresh guidance to lean on, the useful yardsticks are the outlook management reaffirmed last quarter, namely steady volume plans and cash costs down by a low single digit percentage year over year. A flat sequential top line fits a business where realized prices have been stuck near $3,900 a ton for two quarters.
The operational evidence needed to keep the recovery narrative alive is specific. Plant utilization climbed to 74% in the second quarter, the best level since 2022, up from 65% in the first and around 60% late last year. Holding or improving on that would show the US demand surge is real, especially with American steel mills running near 80% capacity. The company also said new commitments were landing more than 15% above prior pricing after its March announcement of increases between $600 and $1,200 a ton. Any update showing that premium widening, or that 2027 contracts are being signed at those levels, would validate the thesis. On the trade front, Commerce's countervailing duty decision was due in early August and an antidumping ruling by the end of September, against alleged margins of 147% for China and 74% for India. Management's read on those outcomes, plus early effects of EU protections that took hold in July, could carry as much weight as the quarter's numbers.
The risks are the ones that made the second quarter uncomfortable. Adjusted EBITDA barely turned positive at $2 million after two negative quarters, and adjusted free cash flow was a negative $75 million, worse than a year earlier. Liquidity fell to $253 million from $329 million in a single quarter, even after the company drew the last $100 million of its delayed-draw term loan and set up an at-the-market equity program. Another big drop would sharpen dilution fears. Higher decant oil and energy costs tied to Middle East conflict also threaten the cost guidance, though rising needle coke prices could help the integrated Seadrift operation offset some of that pressure.
Sentiment has swung from modestly bearish before the last report to modestly bullish now, and the stock is up 6.6% since then, edging past the S&P 500's 4.2% gain. Yet at $7.73 it trades below its 200-day moving average of $8.89 and well beneath its post-earnings high of $11.89, suggesting enthusiasm for the pricing story has been tempered by balance sheet worries.
The decisive issue is cash. If management can show slower burn, stable liquidity and firm 2027 pricing commitments, the bridge to next year looks sound. If cash outflows stay near second-quarter levels or the equity program starts doing real work, the better narrative risks being overshadowed by the cost of waiting for it.