Tokai Carbon announced a major restructuring of its graphite electrode production, cutting capacity from 56,000 to 32,000 tons per year by July 2025 (Link). Production in Japan will be consolidated into the Hofu Plant, with the Shiga Plant being decommissioned. European production at TOKAI ERFTCARBON GmbH in Germany will also see a reduction by approximately 30%. This decision comes in response to declining demand due to reduced global steel production and increased competition from low-cost producers in China and India. The restructuring aims to stabilize supply and enhance the company’s competitiveness in the long term.
The graphite market has experienced significant fluctuations recently. In 2023, prices for both synthetic and natural graphite fell due to a combination of increased production capacity and reduced demand from the EV sector and steel production using electric arc furnaces. Specifically, synthetic graphite has seen increased competition, primarily from Chinese producers, who have ramped up production capacity significantly, leading to a drop in production costs and prices.
Despite these near-term challenges, the long-term outlook for graphite remains strong. Demand is expected to surge due to the rising adoption of EVs and energy storage systems (ESS), which rely heavily on graphite for battery anodes. Most forecasts predict significant growth in graphite demand over the next decade, driven by the exponential increase in EV sales and the push for greener energy solutions.
For European graphite producers, Tokai Carbon’s restructuring may have mixed implications. In the short term, reduced production capacity could help stabilize prices by addressing oversupply issues. However, the long-term impact will depend on several factors, including the ability to compete with Chinese producers and meet the rising demand for high-quality, large-diameter graphite electrodes needed for advanced applications in EVs and ESS.
European producers will need to focus on improving efficiency and sustainability to remain competitive. The trend towards carbon neutrality and environmentally friendly production methods could provide an edge for those who can align with these standards. Additionally, investments in localizing supply chains and reducing dependency on Chinese imports will be crucial for long-term resilience and growth.
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