Japan’s Resonac Holdings announced on Thursday (May 15) its decision to withdraw from graphite electrode production in China and Southeast Asia as a strategic move to downsize and improve profit margins that have been squeezed by the influx of cheap Chinese products.
Graphite electrodes are primarily used in electric arc furnaces to melt scrap iron. Resonac is one of the world’s major manufacturers with a total annual production capacity of around 210,000 tons across six factories globally. The company will liquidate its subsidiaries in China and Malaysia, retaining production facilities only in Japan, the United States, Austria, and Spain in the future.
According to the Nikkei newspaper, production has already ceased at the two Asian factories. Combined with a previously closed plant, these three Asian facilities contribute to about one-third of Resonac’s global graphite electrode production capacity.
“We will continue to review our global production layout,” said Chief Financial Officer Hideki Somemiya during a financial results briefing.
In the first quarter of the 2025 fiscal year (January to March), Resonac’s Chemicals division (which includes graphite electrodes) recorded a core operating loss of 6.3 billion yen (approximately 43.3 million dollars), significantly higher than the 800 million yen loss in the same period last year.
Somemiya stated, “To achieve profitability in the second half of the 2025 fiscal year, we plan to announce a second and subsequent rounds of structural reform plans in August.”
With the significant downturn in the Chinese real estate market and related industries in recent years leading to an overall economic stagnation and persistently weak consumer demand, overcapacity has worsened, intensifying price wars.
On April 28, Japanese bathroom equipment manufacturer Toto also announced the closure of its two factories in Beijing and Shanghai to address the depressed real estate market and price wars with local competitors. Both factories ceased operations on the same day and will be permanently closed and liquidated. As of April 1, the two subsidiaries jointly employed around 2,000 people.
Amid the ongoing US-China trade war, foreign enterprises in China are accelerating the relocation of their supply chains out of the country, while an increasing number of Chinese companies are also looking overseas. On April 9, Luxshare Precision, an Apple supplier, Chairman Wang Laichun stated during a conference call with analysts that the company is in discussions with customers considering moving more production capacity out of China, potentially to the United States.