Date: Apr 18, 2011 Source: (
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Higher oil prices are a double-edged sword for Superior Graphite Co., which enjoyed a 30% rise in sales last year and record profits even as crude oil, the raw material for the graphite it makes, rose in cost.
A big chunk of Superior's graphite, often added to castings and other iron products, is employed in drilling rigs. "So higher oil prices mean our raw material costs go up, but they also mean that there will be more drilling for new oil," says Edward Carney, Superior's CEO and the fourth generation of his family to lead the business.
The nation's largest graphite mine, in Ticonderoga, N.Y., which supplied generations of schoolchildren with pencils, is closed, and today most of the world's natural graphite is mined in China, Mexico and Canada. But natural graphite is being replaced by the material Superior produces from oil at its Southwest Side plant and at facilities in Kentucky and Arkansas.
One of the emerging applications is for storing and conducting power in the latest electric car motors. Graphite is considered ideal because it conducts electric currents easily while tolerating heat.
There is competition in this space, however, from graphite specialists in Germany, Japan and such U.S. rivals as GrafTech International Ltd. of Parma, Ohio. While Superior's sales jumped 30% to $113 million last year, GrafTech's revenue soared 53% to $1.01 billion.
Craig Shular, chairman and CEO of GrafTech, says steelmaking, not batteries, will hold the key for graphite producers this year. "The steel industry has had some very difficult results the last couple of years, losing hundreds of millions of dollars each quarter," he says. "Our customers have been in tough shape through this downturn."
The steel industry is in recovery this year, and Mr. Shular and Mr. Carney expect rising volumes as a result. Graphite lines the walls of blast furnaces and is used to melt steel at mini-mills. "You basically can't melt steel without graphite," Mr. Carney says.
