GrafTech (EAF) with an unusual trade on 4/5 as 10,000 May $10 calls were bought for $0.65 to open and the only notable open interest now in the name. EAF shares have been weak down 21% YTD and sit near lows for the year trying to hold above a 61.8% retracement level at $8.80 and the lower bound of longer-term value. EAF is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals. EAF has the most competitive portfolio of low-cost ultra-high power graphite electrode manufacturing facilities in the industry, including three of the highest capacity facilities in the world. EAF is the only large scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, a key raw material for graphite electrode manufacturing. Graphite electrodes are an industrial consumable product used primarily in EAF steel production, one of the two primary methods of steel production and the steelmaking technology used by all “mini‑mills.” Graphite electrodes are currently the only known commercially available products that have the high levels of electrical conductivity and the capability to sustain the high levels of heat generated in EAF steel production. EAF steelmaking has historically been the fastest-growing segment of the global steel market. Since 2016, the EAF steel industry has grown at a 4.5% compound annual rate according to the WSA. This recovery has taken place since China began to restructure its steel industry, encouraging consolidation and shutting down excess capacity. China’s Ministry of Industry and Information Technology’s current draft guidelines call for EAF steelmaking to constitute 15% of overall steel production by 2025, doubling its current share of output. Pricing has historically been cyclical, reflecting the demand trends of the global EAF steelmaking industry and supply of graphite electrodes. Moreover, as petroleum needle coke represents a significant percentage of the raw material cost of graphite electrodes, graphite electrodes have typically been priced at a spread to petroleum needle coke. EAF currently has a market cap of $2.43B and trades 5.35X Earnings, 4.9X EBITDA and 6.37X FCF, an extremely low multiple, with Debt/EBITDA ratio around 1.6X. EAF screens well across metrics with near 50% EBITDA margins though down from 63.5% in 2018 and impressive ROIC/ROCE annually. EAF should see positive demand from growing needle coke use in EVs with graphite a key material in anodes for lithium-ion batteries. On 2/28 EAF’s CEO announced intent to retire which could spark some M&A interest in EAF. EAF noted on its latest earnings call “Over the long term, we expect electric arc furnaces will continue to grow their share of the global steel market as it is more cost-effective and environmentally friendly process and an effective way to decarbonize the steel industry.”