Worries that a global slowdown would dramatically reduce demand for steel have sent shares of GrafTech International tumbling by almost 50% since February.
Granted, as a leading manufacturer of graphite electrodes, which are essential to the production of steel in electric arc furnaces, GrafTech’s (ticker: GTI) business would certainly be hurt in such a scenario.
However, the market reaction, in our estimation, appears to be a sharp overreaction.
Even without a pick up in steel demand, GrafTech could start to see improvements soon. In the first quarter, high inventories of graphite electrodes, ordered back in 2011 when demand was strong, …