$HEG Well-Positioned for Global Steel Sector's EAF Transition

Despite fragile global demand, logistical headwinds, and raw material cost pressures, $HEG maintains an optimum capacity utilization rate of over 90%. Global Shift Toward EAF Steelmaking: Global steel production dropped 2.2% in Q1 CY26 due to lower output from China and Russia. However, this decline was mitigated by rising production in regions with higher Electric Arc Furnace (EAF) shares like India, the US, and Germany. Robust Medium-Term Demand Pipeline: The medium-term demand for graphite electrodes remains highly positive. Over 100 million tonnes of EAF capacity are projected to be added by 2030, which translates into a 25% to 30% increase in global graphite electrode demand (excluding China). Favorable Policy Tailwinds: Structural growth is strongly supported by environmental regulations. Europe's Carbon Border Adjustment Mechanism (CBAM) tax incentivizes lower-emission EAF production, while upcoming tariff rate quotas will restrict imports, forcing the EU to boost its own EAF-heavy steel manufacturing. Pricing Discipline and Protectionism: China's "anti-involution" policy is expected to curtail steel dumping in international markets like India, fostering better global pricing discipline. Additionally, near-term raw material inflation is expected to be offset by rising graphite electrode spot prices. Strategic US Revival and Value Unlocking: Easing trade relations with the US are set to revive HEG’s historical exports there (which accounted for 10% of sales). HEG is further expanding its capacity by 15% by early 2028 and is progressing with the demerger of HEG Greentech to unlock value in its energy business.