Kelly Taylor – Director, IR and Corporate Communications Craig Shular – Chairman and CEO

Luke Folta – Jefferies Ian Zaffino – Oppenheimer Michael Gambardella – JPMorgan Tim Hayes – Davenport & Company Mark Parr – KeyBanc Chitra Sundaram – Cardinal Capital Eric Glover – Canaccord

Thank you, Tia. Good morning and welcome to GrafTech International’s second quarter 2011 conference call.

On the call today is GrafTech’s Chief Executive Officer, Craig Shular and our Chief Financial Officer, Lindon Robertson. We issued our earnings release this morning.

If you do not receive a copy, please contact Marie Nor at 216-676-2160 and she will be happy to fax or email a copy to you. As a reminder, some of the matters discussed during this call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

Please note the cautionary language about our forward-looking statements contained in our press release. That same language applies to this call.

Also to the extent that we discuss any non-GAAP financial measures, you will find reconciliations in our press release, which is posted on our website at www.graftech.com in the Investor Relation section. At this time, I would like to turn the call over to Craig.

Thank you, Kelly. Good morning everyone and thank you for joining GrafTech’s call today.

Today we will take you to our second quarter highlights and then open it to questions. Let me start by welcoming our new CFO Lindon Robertson to our team.

Lindon joined from IBM where he has had over 25 years of experience in Finance and International Business. During his time at IBM Lindon held multiple senior financial leadership positions which included international assignments in China and Japan totaling 10 years.

Lindon bring us extensive financial and business growth skills, we are all delighted to have him on our senior leadership team. In Q2 sales improved to $320 million up over 25% from the same quarter last year driven by improved demand in both of our business segments.

EBITDA was $67 million excluding previously reviewed acquisition accounting and related items and an increase of more than 35% year-over-year. Net income was $29 million or $0.20 per share, as expected net income declined year-over-year as we recognized charges related to purchase price accounting and a delay in profit recognition associated with intercompany sales of needle coke.

Operating cash flow was a use of $17 million as we increased working capital to support our growing sales. Net debt was $375 million at the end of Q2, our borrowings during the quarter were used to primarily fund CapEx to support growth and higher working capital requirements.

The integration of Seadrift and St. Marys has progressed very nicely and is expected to be largely completed by the end of the third quarter.

Year-to-date these businesses have contributed approximately $40 million of EBITDA before purchase price accounting adjustments. We are tracking well against our targeted synergies and the full year targeted EBITDA contribution of $90 million.

Our balance sheet remains very well positioned and will allow us to grow and seize opportunities as these economies continue to recover over the next several quarters. Turning to segment performance in our industrial material segments sales increased nearly 30% to $270 million in the second quarter versus the same period a year ago.

Sales in the quarter increased primarily as a result of higher graphite electrode sales volume and third party needle coke sales. Operating income for the segment was $39 million excluding $7 million of acquisition accounting and related items.

Graphite electrode Q2 operating rates came in at approximately 80% for the quarter versus 71% in Q1. We are currently operating at approximately 85% utilization.

We expect that this rate will continue to increase over the course of the year exceeding the fourth quarter with electrode operating rates over 90%. Due to raw material increases and supply demand factors we have announced price increases to our customers in our graphite electrode and needle coke businesses.

In June, we announced new pricing for normal premium grade needle coke of $2650 per metric ton. In early July we announced new graphite electrode prices for standard sized melted electrodes of $6900 per metric ton.

While we do not expect the material impacted 2011 results from these price increases as the majority of our 2011 businesses is booked. It better though positions us for 2010 to manage margins of mid increasing cost structure.

In our engineer solution segment, we had record quarterly sales of $50 million. Segment operating income was $7 million or nearly 15% of sales an improvement of 3-4 percentage points year-over-year.

This business segment has continued to gain attraction and is now at a $200 million annual run rate. On the tax front, we benefitted from a lower rate of 19% in the second quarter as a result of favorable jurisdictional profitability.

We do not believe that this lower rate is applicable to our full year and therefore reiterate our full year tax rate guidance of 22% to 24%. Turning to outlook, the IMF estimate for global GDP growth was revised downward slightly to expand by approximately 4.3% this year.

IMF lowered economic forecasts for the United States, Japan, Italy and the U.K. while reiterating its forecast for stronger growth in emerging economies given robust internal demand.

In total, the global recovery is expected to continue but is progressing slower than previously anticipated. The weaker than anticipated activity in advanced economies and continued financial volatility has resulted in a less positive customer sentiment through the summer months.

We continue to expect our full year EBITDA to be in the range we previously provided, but at the lower end of the range as a result of this mild summer slowdown. We are seeing solid demand into the fourth quarter and expect this to continue into 2012.

In the third quarter of 2011, we are targeting EBITDA to be in the range of $70 million to $75 million. Third quarter targeted EBITDA reflects the previously discussed less positive customer sentiment and weaker demand associated with the normal European holiday season.

Due to customer order patterns in the second quarter, the impact of intercompany profit in inventory on sales of needle coke are expected to carry over into the third quarter, resulting in a headwind to the third quarter EBITDA of approximately $2 million to $4 million. In the fourth quarter, we are targeting EBITDA in the range of $90 million to $95 million.

We expect that this quarter-over-quarter improvement will be driven by the following. One, we will realize a full quarter’s impact of the backward integration of Seadrift.

Graphite electrodes made with Seadrift coke will flow through as third party sales. These electrode sales will yield margins on both the electrode side and the embedded Seadrift needle coke sides.

So we will have a double margin if you will on these sales. Number two; we project the fourth quarter to represent our highest third party needle coke sales of the year.

Seadrift profits will be recognized immediately on these third party sales, versus the delayed profits associated with Seadrift needle coke sourced for internal consumption. Thirdly, our operating rates continue to increase across all of our businesses and we expect that fourth quarter graphite electrode operating rates will be 90% or more, yielding better cost absorption.

Finally, our team is pleased with the acquisitions that have been executed to promote growth, the integration of Seadrift, St. Marys and Micron Research have been successful and our two new team members have performed exceedingly well.

Synergies and targeted EBITDA contributions from these acquisitions are on track. The full benefit of these acquisitions will be more apparent in the fourth quarter of this year and as we move into 2012 our low cost advantage business model will position us very well to deliver long term shareholder value.

With that, let’s open it up for Q&A.

First question, firstly I appreciate you putting the numbers you did regarding electrode and needle coke prices in the press release that’s really helpful. But I wanted to understand if you can provide some more color on what the year-over-year changes on those numbers would be or in other words, what were the 2011 expected realizations?

Well, on the electrode side, we have previously announced an increase early in the year. I think you should think of that around 15% increase and then this last increase we announced the beginning of July’s about another 15%.

So I think you can think about a 30% increase when you take those two together. On the needle coke side, something that we must all recall is needle coke prices have been pretty much flat for two years.

So if we want to look back to the cost structure of oil and decant oil as it relates to our needle coke business, we need to go back two years and so if you go back two years really oil was in the low 60s a barrel and of course now Brent is 118 and WTI is a 100 or so. And so on the needle coke side, our increase reflects that two year cost increases that we must observe.

So the needle coke percentage increase is much larger and it’s much more reflective of what the cost structure is doing. So I think if I look at the needle coke prices and where they are in relationship to the 2650 that’s probably a 65 plus percent increase and again recalling that is a three year increase if you will because needle coke prices have been flat for two years.

Okay. So for 2011 I am just trying to understand the 55% increase is that applied to the needle coke that you have sold in 2011 to that pricing?

No.

Because there was an increase in 2011 relative to two years ago. So I am just trying to get the year-over-year impact on ‘12?

Yes. Needle coke has been pretty flat for two years, so the price increases we have announced on graphite electrodes and needle coke the way you should look at it goes is this year they will have virtually no impact our books are pretty much put together.

And so you should look at those are 2012 pricing actions. Just trying to get ahead of the large cost increases that we are facing across the supply chain.

Okay. All right, that’s helpful, thanks and the same question I had with regards to average selling prices in the quarter.

When I think about your revenue growth in industrial materials it looks like it was up few percent and if I use your operating rate to proxy per shipments, you went from I think close 70s to 80% from the first quarter to the second quarter. So I am just trying to get a sense of why the increase in revenue was little higher for the second quarter, I mean it was there a step down in sequential pricing to that magnitude that would offset that?

Yes. Pricing is lower in graphite electrode so that’s the biggest drag on Q2 sales.

Obviously the volumes across all of our businesses are up. So we are very pleased with the volumes, utilization rates are coming up very nicely, the needle coke business is running at a 100% and the electrode rate is now at 85% utilization rate headed to 90 plus or we are very happy with the volumes you are spot on.

When you get the Q you will see that electrode prices in the quarter were down about 7%. Now if I look at the full year I would expect them probably to finish the year down around 5% or less, and the reason they are down 7% in Q2 is the compensation, the year-over-year comp and if you recall a year ago we had a bit of carry over higher prices from the prior year.

So the comp year-over-year makes it a 7% slide for the quarter. So I think that fills the gap that you were looking at.

But for the year I would think our electrode prices are slightly down 5% year-over-year may be a little bit less. So pricing is where we are feeling it, volumes have come up nice; EAF steel production is coming up nice in total terms.

It’s going to be $400 million plus and the estimates I look at it could be north of $425 million metric tons of EAF steel. Those are very good EAF steel production quantities.

Okay and just last one if I could can you just comment on where do you see graphite electrode inventories in the channel. I am just trying to get a sense of where we could be heading in the second half relative to expectations for 2012?

Yes. We don’t see any build up in the channels, the channels look pretty good.

We don’t have anything like that in 2007, 2008 when there was a bubble and so as I look across the entire global market I don’t see a lot of excess electrodes out in the channels. So I would say the inventories are healthy, they are at the right place, there is not an excess out there.

Can you talk about the dynamics in needle coke, you know how much of the production has been taken offline in Japan and how does that impacted your pricing your outlook at all?

Yes. As it relates to Japan the Tsunami and the unfortunate tragedy in Japan really did not have much impact on the needle coke production in Japan.

It has to do one where the needle coke are set, they are set primarily in the western grid and that grid and that section didn’t had much impact at all. So if as I look at the needle coke industry worldwide, I see its running well Japan did not miss a beat.

We are running well and we are running at full out. So we are full capacity demand is nice and solid as we have said, we are taking about 70,000 metric tons of as planned and as previously reviewed from the Seadrift coke of our electrode facilities, the rest is all sold to third parties.

So needle coke has tightened up very nicely this year. And I may highlight just there is a sister to the needle coke its anode coke, it’s a lower grade coke, it’s much easier to make, there is a lot of producers, a lot of it goes into the anode industry for aluminum.

The anode coke business is probably 20 times larger than needle coke and anode coke the sister coke is running full out right now as we speak. So the entire coke market has tightened up very nicely.

The very large anode coke markets running full sold out and now we have the needle coke market running at a very high op level.

Okay. And then the other question would be when you talked about resource coming at the lower they guide –- is that primarily from the electrode business or is there –- how do you decide with electrode business from the (ES business)?

ES is running very nicely, set an all-time record quarter here in Q2. So it’s not that ES business, it’s not our needle coke business it’s our electrode business that’s where we are feeling that the softness on the price that’s where we are feeling the summer slowdown that we are seeing.

I think a number of the large steel producers over the last five, seven days have announced and I think virtually every one of them has seen a soft patch here in the summer. I think most of them see that that’s going to comeback in Q4 and auto production will probably comeback up in Q4 but it’s the electrode business Ian and it’s a soft catch that we are all facing and virtually all my customers in all geographies are seeing it.

A couple of questions, one, can you give us a feel for the quarterly progression of utilization rates in your electrode business from the first quarter through the rest of the year over 90 in the fourth?

Yes. Q1 came in about 70%, 71%, and then this quarter came in just a tad under 80%, and now we are at 85% right as we speak today.

And I would expect that the entire Q4 will be 90% plus. So we have been ramping up in some cases and at some facilities, we have had to add people.

So electrode operates at a very good level. On the needle coke, we’re full out and then the ES business, very good off take as you see record sales in the quarter.

So volumes have picked up nicely and our soft spot as we said is GE.

And on a global perspective, on electrode furnace utilization rates, what are you seeing?

I would say globally we are probably in the mid-70s, something like that. I think, you know, a couple of the large accounts that have reported some, they have their own nuances, I saw a couple one or two that were in the low 70s, but I would say if I added them up, they’re probably at about a 75% operate.

What we always have to remember in the global ES industry, a lot of new furnaces have been put in the ground. So obviously, it has changed the base.

And even in my team we tend to forget that sometimes. And so the utilization rate obviously is one indicator.

But when I go to the tons that they produce at ES steel, that’s my closest correlation to electrode consumption and I would say this year it looks definitely north of 400 million metric tons I think it’s going to set an all-time record 425 plus in global EAF steel production, and that’s to me, that’s a nice healthy data point, and that is probably the closest correlation to electrode assumption.

And on Seadrift, you’re currently running at capacity?

We’re full out.

And you have talked in the past about moving the capacity up. And any updates on that?

No update yet. What we have done this year is there are some normal maintenance turnarounds, we have already done, we did those in the last couple of months.

We put in some quality things we wanted to do, we have some of our own needle coke technology and patterns, and the team did a great job with their normal maintenance turnaround that went flawlessly, and then when we had the equipment down and open, we also did some quality and technology enhancements, so that has gone very well for us. So Mike, they’re running full out right now, and if you follow the weather to give you color, there’s a tropical storm down in that area, and we’re prepared for that.

I may lose a couple of days of production down there. I don’t think its material but looks like it’s going to be a tropical storm, maybe a hurricane one right now, and it could hit somewhere on that Gulf coast, our team is very well prepared for this.

It’s going to be a normal type weather disturbance, but we could lose a couple of days there. But other than that, we’re full out and I am very pleased with the new team members there.

And one last question, just a couple of days ago, U.S. steel reported their second quarter results.

And then in the Q&A, John Surma (ph), the CEO mentioned that they’re looking at the potential of building direct or design units and even electric arc furnaces as a way to really avoid –- not avoid but lower their coal exposure on their total business since you don’t need coal for EAFs or DRI. Do you see others doing that?

And how much of an opportunity is that? It’s obviously incremental tonnage if they go ahead for electrodes in the US, but do you see or hear anybody talking about doing it elsewhere?

Mike, we see that to be a growing theme. It’s obviously a huge opportunity for our company, and we see it just in that growing theme of electric arc furnace steel production is the low cost way to make steel, environmentally friendly.

My group of customers in that space are the largest recycler of any kind on the planet and so that entire theme, whether you’re getting away from excess energy consumption, or carbon footprint or trying to improve your cost structure or the nimbleness of your facility. Obviously an EAF is so much more nimbler than an integrated shop we see that trend.

So I have seen others talking about DAR production, putting it in the ground, and obviously it takes electrodes to make that steel and we love to make DRI. We have got great electrodes that perform very well in the DRI system.

And I have DAR customers around the world.

The one question that your ramp up in utilization rates for graphite electrodes from Q1 to Q4 seem to be more than what the EAF industry operating rates would be increasing. My, first off is maybe customer restocking, but you seem to indicate that that’s not really probably not really happening, is there any – given the market share gains or is it just simply the EAF capacity has gone up so much more than the graphite electrode industry has taken its capacity up?

Yes, Tim, you bring up a very good point. And we talked a bit about this in the last quarter.

We have some customers in the book in the second half of this year that we did not have in the first half of this year, so some of that ramp up is just the way our booking went, if you recall going into the year, we worked very hard to get an increase on graphite electrode prices to offset some of these cost pressures we’re talking about now. I mean, we saw them coming and cost have been going up across the platform that as we talked earlier question, that wasn’t successful and the prices are down of course year-to-date.

So we lost some business in the first half due to some of those efforts, we have that business in the second half, so that’s a significant portion of it, in a normal year, we would have that business across the platform, obviously we have great electrodes, great service model and so, it’s not that we don’t work well in those shops or haven’t earned a way in. So it was that an issue, so that’s affected our book.

We have customers and business in the second half that we did not have in the first half, Tim, and then additionally, it’s this growing EAF steel production across the board. Right?

This should be an all-time record year of EAF steel production across the global platform.

And finally, the pricing on graphite electrodes, you gave the year-over-year change, was that actually down sequentially from Q1?

Let’s see I have got to recall back to the Q. I think the first quarter we are down around five or six, so yes down a little bit.

It is down a little bit more than Q1, but I would expect the full year to come in down less than 5%. And as I said earlier, part of it is, in the year-over-year comps, the first part of last year, we had carryover business that was at a higher price.

So, the comp challenges are little bit harder in the first half. I think the next couple of quarters, you see that the year-over-year comps aren’t –- the hurdle rate isn’t as high, so we should finish the year with prices down 5% or so.

Right. I know those are year-over-year, but even though the year-over-year maybe coming down a bit in terms of how negative it was.

We calculably can back into the sequential change Q1 to Q2, can you give that?

Yes. I don’t think it was much, I’m just recalling, I think that Q1 was 6% or 7%, so and this quarter is around 7%., so that’s the first half.

The second half and it’s just a comp issue, because the first half of last year there was higher priced business that carried over into the beginning of the year. So, I think we’re going to finish this year the way you should look at it.

We’ll probably finish this year with year-over-year, full year GE prices down 5% or less.

You’re always superb. You know, and you got your new CFO, so that makes it extra encouraging that you have your team back together again, so good luck with that.

Though we are delighted to have Lindon on, he has hit the ground running; obviously he brings seasoned skills to us. He has been involved in a lot of growth initiatives at his prior company and he has also been kind of the, the go-to-guy that they threw into Beijing, and those kinds of things, so we’re delighted to have him.

And you’re actually right. I would much rather do the one job than the two jobs, so I’m delighted to have Lindon on board.

And now all he has to do is get to know how to work with all of us guys.

Right. I didn’t tell him about you guys before he signed up.

It’s probably a good thing. I get the weakness in the electrode pricing, but I am encouraged by the fact that volume typically comes before pricing.

And, one of the things that I’m a little bit curious about, your comments, if you go back and you kind of look at let’s say the timeframe, ‘03 to ‘07, or ‘04 to ‘08, when you were consistently above 90% utilization, but there were really only a couple of years, you where pricing unfolded aggressively. And I think the utilization rate for GrafTech at that point was a year over 95%, over 98%, and in one year, you even were over 100% utilization.

And I’m wondering, do you think that with your utilization, looking in, call it, low to mid- 90s for 2012, is that going to be good enough utilization to really get the pricing traction against these nominations that you share with your customers in the last 60 days?

The way we should think of our GE plants, and I think just the GE business. When you get to about 95% operating rate, that’s about all you can really get on a consistent basis.

Could you get a month or a very fortunate quarter where everything goes right, yes, be a little bit higher but at 95%, we are pushing the envelope in our graphite electrode facilities, because it’s a multistage batch process. So looking back in history north of 90% has been an operating rate that we’ve enjoyed.

Its better absorption, our plants run well, they get to run steady. So the cost profile tends to improve and then as you said the supply chain gets tight.

So I would think of 90% plus. Those are you got to run your plants very hard, things have to go well.

You can’t have too many speed bumps to get 92%, 93%, 95% operating rate on a consistent basis in an electrode plants.

Okay all right. I appreciate that thanks.

I had or actually two other questions. One I was wondering, if you could give us an update on your longer term vision to work on improving the quality or differentiating the quality of the Seadrift output, I know there are couple of different levels in needle coke and Seadrift has made it pretty far up the curve but still can move further and I would be curious as to an update on how that progress is going?

Absolutely. We had as I mentioned a little bit before we had our normal annual maintenance kind of midyear here, and that went very, very well and during that time, when the equipment was down, and we had the team implement some process improvements, some new technologies, building on what we talked about maybe two quarters ago, my science team has been living down there.

So a Swat science team, they are very skilled in this area, has been living with the Seadrift team since we owned the assets. And they implemented that, those kinds of improvements and putting some of that technology during the maintenance shutdown.

The second part is, we’ve been working very hard on SPC at that facility. We see tremendous opportunities on SPC.

So that is underway and I think over the next 12 months, we will start to see some of the benefits from both of those actions. What I can share with you is Seadrift makes a very good normal premium.

So kind of the bread and butter of the market they make a very good normal premium. In fact, some of those electrodes that we’ve been making through the facilities with Seadrift coke are starting to come out.

And some them we pushed through the system and of course our customer tech service team has monitored them. We got right to the customers furnace and lit down those furnaces for days.

And we have started to see a couple of instances where we’ve been in a shop for 20 years, and those new electrodes have set all time shop performance records in consumption. So the way I would look at it mark, a lot of activity has already been done in our first six, seven months of ownership.

It will take a while to work through the system. It will be an ongoing process, but I think over the next 12 months or so we will see a more consistent needle coke from Seadrift at a much higher performance level.

The team is also going to work on the super-premium. There is another premium, it’s a much smaller market, but there is super premium grade above normal premium, and our team is working very hard on that.

And I think also in another 12 months to 18 months you’ll see a super-premium come out of that facility that is very, very competitive with the best out there.

Okay, terrific. I appreciate that update.

And one last question, if you look at the new pricing that you’ve announced for needle coke, I mean, does that imply a widening spread based on your underlying decant oil, cost expectations heading into next year.

Yes. Our goal is, let’s get ahead of this early.

Costs have gone up an awful lot. And as we remind everybody, needle coke price has been flat for two years.

So really, we’ve got to go back two years and take a look at what were the input costs then. And so oil then was $62, $63 back in those times of timeframes.

So our mission here is, let’s get ahead of it. Oil, needle coke, electricity, labor, all of those items are going up, and they are all going up in a continuing, improving global economy.

So there’s more pressure on all costs as the economy starts to improve. So one, let’s get ahead of it.

And then two, the goal will be let’s see if we can achieve some margin expansion here. And we get margin expansion from many advantage points, our Lean Six Sigma program, productivity improvements, and then also historically when the supply demand curves have been tight we’ve been able to drive through some margin expansion.

So that will be the goal for 2012.

I guess with Seadrift operating at full capacity, and the industry operating fairly full that would make that a little bit more credible or more predictable. So that’s good.

I think its good timing from your end.

Thank you, sir.

So the first question I had was on the margin for industrial materials. It was down sequentially and year-over-year even after you adjusted for the various step ups and other costs.

What is it that caused that decline?

Chitra, on the IM business, when we look at the big components in there, graphite electrodes and of course our needle coke business, that year-over-year decline is in the graphite electrode business, it’s weaker prices in the phase of rising cost across graphite electrode production facilities.

Yes. So, sequentially from Q1 to Q2 FX seems to have played the role from Q4 ‘10 to Q1 ‘11, and then obviously raw materials actually I think broken out the (inaudible) factors margins by about 400 basis points.

Sequentially from Q1 to Q2, would you be able to track for us what the step down was, what role raw materials play, what role effects might have played?

Well, in the raw materials we’ve seen increases across the broad base on electric power, so electricity rates have gone up. As the economies have recovered, demand on electricity has gone up in most geographies that we operate in, so electric power is up.

Natural gas is up in some regions depending on the economies, South America is performing well, Brazil is running well, a lot of construction in Brazil, so there is a lot of pressure and cost in Brazil like natural gas, electric power. So labor is going up.

We’ve been recruiting, adding people coming up the operating rates. And so I would say most our cost what we see is rising cost.

We buy some anode coke, and an anode coke unlike needle coke, it has not been flat for two years. Anode coke prices have going up dramatically.

We use the anode coke in some of our lower grade electrodes, our non-melt or grade electrodes and anode coke giving as I mentioned earlier very, very tight, very hard to find 500 metric tons of anode coke and so those prices have been going up significantly.

Is the rate –- sort of quantify –- I mean how much of the decline would have been because of at least you know, raw materials or cost inflation versus if there was in fact from FX and not clear?

I would say it’s not a guidance we usually give, but I mean a big piece was the lower price of graphite electrode, so that’s a big piece, and literally costs every cost up year-over-year, other than the needle coke, which has been flat as I said, but anode coke cost up which is another important input, so all the cost up. FX in the quarter, some little swings, but not much impact, when you look across the quarters, you know, one, two million that kind of thing, not material.

The other question I had was on the guidance. You talked about being at the lower end of the EBITDA guidance?

Yes, Ma’am.

If they are having the sequential step up in utilization, and they are only coming in at the lower end, what exactly was in the higher end of the guidance to begin with? That you are not seeing?

Well. We have seen many speed bumps, if you will, over the course of this year.

You know if we go back to when we first gave guidance, you know, there have been a number of little speed bumps, right. So we’ve had the Japan tsunami, slow down Japan steel, affected a lot of global auto production.

We had the Middle East crisis that affected many countries. That took orders right that we already had right out of our book, so that was an impact.

let’s see, other than the speed bumps we have been through, we had a national strike in South Africa that was about three weeks, and so that was this past month. Our teams worked through that, but it’s affected the entire economy.

It wasn’t pointed at our business or our plant, but literally, the major unions in South Africa went out for two or three weeks, and some of them are still out, some of the oil and fuel unions are still out. So we had that speed bump.

And so we had a number of those kinds of items. And then you throw on kind of where global steel is today with the summer soft patch.

You know I think all the U.S. steel producers that have reported I heard a couple of Europeans report and they’re all seeing a summer soft patch.

Even Japanese, I listened to a couple of the Japanese reports in the last few days, and they’re seeing a soft patch here. So I think those are what’s contributed, that’s what pushed us down to the lower end of our guidance.

But it’s not so much from a volume standpoint, just a duplicate cost redundancies those kinds of things that happen to the EBITDA?

Well, some volume, the customers are little softer, ES customers, yes, like I said, still year-over-year performing very nice record quarter, but there is some pauses there too from some of those economies that were affected. Our ES business since South Africa, they just lost three weeks.

Japan ES and some of the auto industries, some of those applications we have, have felt. So it’s been a number of those three or four speed bumps we’ve talked about that have comp pushed us to the lower end, in addition to the slowdown we see right now, and I see it in stainless steel in Europe.

I see it in the Japan steel producers that have all came up and reported, the US steel producers have all came out and kind of said ‘yeah, we see a soft spot in a summer.’ We think we’re going to work through it.

I think the general comment would be auto production should be much stronger in Q4, and I think most of our customer bases across the globe see Q4 kind of coming back and picking up and then running into 2012 in pretty good shape.

Stepping away from this formal pricing standpoint, Mark’s question I thought was quite on the mark, which is in previous cycles, other than that period of ‘07, ‘08, well, you have did indeed see some very strong pricing power. You all have been able to operate a very high utilization without seeing dramatic pricing benefits.

And I could be wrong, so please correct me if I am. But if that is the case, what has changed today or what is different in today’s environment that would allow you to have significant pricing?

I think the marketplace determines the price so at the end of the day, the market is going to determine all of that. Looking at where we are, I see the needle coke business running full out and I see the sister business, which is 20 times larger than the global needle coke business running full out.

Our electrode business now at 85% headed to 90% plus, and I see all of that driven by into a large extent our electric arc furnace steel production headed from all-time record volume year and so the historic volume record before I think was 2007 was like 417,000. And so we’re going to be back over that level.

So I think that’s more of a driver. My customers are burning an awful lot of electrodes, and we face cost pressures now, and the marketplace will determine where that finishes up.

And my final words on engineered solutions, where do you see the margins for this business evolving? Because there seem to be many different applications that you could potentially sell into, but although there has obviously been some sequential improvement in margins, it doesn’t feel like where we should be, is that because you are still in investment mode?

On the ES business, the way we would look at it Chitra is, we see growing margins overtime. It’s never a straight line.

So we could have some quarters that it slips a little bit. But what we’ve been doing in that business is developing new technologies many times patenting it, and then commercializing it.

And so the percentage of the portfolio of our ES business that is new products, new technologies and sometimes protected technologies has been growing every year. And on that part of the business, we get better margins, so I would look for a growth in the sales there.

Many of the markets we serve there solar, advanced electronics are double-digit growth. And so I would see we’re now at a $200 million a year run rate on sales.

I would see overtime more and more of the new technologies and the new solutions, we are selling to customers will make a greater percentage of our portfolio and has higher margins. So I look for margin expansion over the next few years in that business, and I look for continued significant sales growth in that business.

Are you comfortable discussing at some sort of over the next five years, where are those higher margins businesses today and where they might be in the year?

You raise a good point Chitra, and I think what you’ll see us do it at the right time, maybe at some time next year, as the global economists have come back and they get more stable, and some of this wild volatility in the economy is behind us, what we will probably do, it could be next year or the year after, the economists will tell us the right time. But we’ll probably come out and give a nice three to five year look.

We will feel good I think to do that when we have more stable economies, more stable economies and what we’ll do is we’ll layout kind of our three to five year vision for our IM business, which has gotten much bigger now and back integrated. We’ll lay that out and our ES business is now running at a $200 million run rate.

So it has become a real substantial and a very global business with huge customer names in it. We’ll give a three to five year outlook for both of those business segments and kind of layout where we see those going on sales, where we see those going on EBITDA margins and expansion of those margins, and maybe a little bit where we see some of the technologies moving.

I’m sorry, this is finally, I forgot, can you give the contributions on the revenue line from the acquisitions that we still not (anniversary)?

Yes, we have been doing that in the Q and the Q will come out shortly, but I think what you’ll see is that the year-to-date revenue contribution from Seadrift and St. Marys will be a bit north of a $125 million.

Okay. Thank you very much.

So those have come along very nicely. I’m delighted with our new team members from all three acquisitions.

All three acquisitions are running full out. So we have Micron now running full out.

It was at 50% when they joined our team. St.

Marys, the Electrode facility they are already full out and as we said Seadrift and needle coke is full out, so we’ve been delighted with that, and that’s gone very well.

Thanks. I was wondering if you could talk about the competitive landscaping on graphite electrodes, because based on your commentary, you’re projecting a record level for EAF steel production globally this year.

Customer inventories are in fine shape, no excess there. Is there an additional graphite electrode capacity that has come online or additional pressure from competitors that you’re seeing in the pressuring price?

Eric, there’s no real significant material additions to capacities. We’ve had some 10,000-15,000 tons here and there added, but nothing material.

Recall, this is 1850; 900,000 metric-ton market, so the addition of 10 or 15, pretty small in the global context. So, not really new capacity of any material size.

But having said that, it’s a very competitive market. Electrode producers, they’ve got large plans, they like those plans to run it at high operating level, they’ve run much better at a higher operating level.

So at the lower end of the operating rate, it can be hand-to-hand combat. And even at the higher level if there’s no free lunch here, this is a very competitive industry.

The competitors range from Russia to China, Japan, Germany, US, and so it is a very competitive business, and you got to have great service, you got to have a global platform that can take care of the customers and the world, and you got to have a spectacular product. And that can give you some nice stickiness with customers, but it’s very competitive.

Okay. Could you describe an environment where you’re actually able to generate fairly decent pricing increases on graphite electrodes?

What would be the globally in terms of the economy, steel utilization etcetera?

Well, I have got to point back to our history. If we look back to kind of ‘07, ‘08, we were operating at 93%, 94%, 95% operating rate in electrodes, there were a lot of cost pressures, oil was running up, needle coke prices were going up, needle coke was very tight, anode coke back then, this is the first time I’ve ever seen anode coke sold out in my career.

And so I think we are headed towards that kind of environment. I think as I keep reminding people, let’s look at EAF production levels, and EAF is set an all-time record production this year.

But at the end of the day, we got to recall this is a very competitive landscape and the market is going to determine where this goes. And I think that’s the same in steel or any of the other industries and our customer base.

At the end of the day, it’s a global market. It’s a very competitive and the marketplace will determine all of this over the course of next year.

Okay. Couple of more questions.

Just firstly on needle coke, the 2650 that you have in your press release, is that a price that you’ve locked down at this point?

The negotiations for needle coke are really at the front end. I’ve had very few customers come in yet for needle coke pricing for next year.

We wanted to get ahead of it, as I said, because of it has been flat for two years there has been price increase, cost were up dramatically. So we have nothing in the book for next year for electrodes or for needle coke.

It is all wide open.

Okay. And your expectation to run at 90% capacity utilization towards the end of the year, do you think –- I mean does that apply to you, or do you think that will also apply to the industry as a whole?

Well, I think you got to listen to our competitor’s calls, and see where they’re at. Generally, some of our smaller competitors, as I listen to their public conference calls; they have been running at even a higher level already, which is not unusual.

The smaller competitors often are at higher op levels during a recession and trough. That’s been very typical in our industry and I think many industries.

But Luke, I think you got to listen to the calls. I think we have many of them are publicly traded and just see where they are at.

Okay. I guess where I’m going is, there’s a pretty substantial increase in needle coke, 60% like you were saying.

It looks like the industry is going to be operating at 90% plus towards the end of this year, and you’ve announced a pretty substantial increase in graphite electrode pricing for next year, I mean quite a bit above for this what we are expecting. I just wanted to get a sense of do your customers and the competitors in this business get it in the sense?

I mean do you think that they’re prepared for this level of price increase for next year?

Time will tell. I think our dialogue; obviously what we do is we go out to letters in June and July, with the various customers, needle coke and graphite electrodes.

We are very diligent and explain all of the cost increases that we face on the two businesses, the large customers, we sit down face-to-face. I don’t think it is a surprise to them on what’s happened on the cost structure.

Recall many of our customers are using a lot of the same cost inputs, electric power, labor, natural gas. They all see the oil prices.

Those are public and everyone knows those. So I don’t think these are big surprises.

I think the anticipation is oils moved a lot. It’s back 118 bugs a barrel and Brent and so I think they all see that oil has gone way up, electric power is coming up almost every other month, natural gas is up in many regions.

So in my discussions with customers, it hasn’t been a big surprise to them, and they know what’s happening on the cost structure.

Tia, thank you very much. Everyone thank you very much for your questions and your interest in our company and we look forward to talking to you at the end of next quarter.

Have a great day.