With 2019 and a particularly challenging 2020 in the rearview mirror, Semco Carbon is hoping for good things in 2021. The last couple years have presented multiple challenges regarding graphite, from material acquisition to production. Raw materials have been a particular challenge. Given the 2018 closure of multiple Chinese manufacturers per new green initiatives, many major graphite manufacturers found themselves without enough stock. Then, in 2019, everyone jumped into production and it became a year of oversupply. 2020 was a completely different story. Given the economic slowdown caused by the pandemic, lots of graphite manufacturers decided to shut down production yet again. The second half of 2020 saw a shortage in raw graphite materials, and that sent graphite prices up.
With these wild swings in the availability of raw graphite materials from year to year, we can only guess what 2021 will bring in terms of graphite availability, pricing, and production. Early signs point to a rebound in economic activity for the second half of the year, so graphite prices will likely continue to climb at a decent pace with availability of raw graphite materials on the low side. Semco has managed to pass through the past two years relatively unscathed due to internal changes geared towards scrap reduction and increased productivity. As a result, we foresee holding steady in the face of future challenges. With much of our customer base poised for a rebound in the second half of the year - especially in the aeronautical industry - we’re anticipating stronger sales numbers in 2021 than in the previous two years. In terms of equipment, we are proud to have acquired new graphite machining tools that better position us to serve our customers, despite the slowdown in the economy. The Romer Arm, for example, will allow the Quality Department to exponentially speed up the inspection process on a variety of parts. We have also added new team members, including a Lead Machinist with considerable prior experience who will bring a new set of competencies to complement our existing crew.
While we do expect some challenges in 2021, signs point to a stronger second half with a rebound in sales over the next 6-12 months. Raw graphite materials pricing and availability are still a bit of an enigma given the events of the last two years, but our team will continue to do what we’ve always done: keeping our focus on quality and productivity. All in all, we believe 2021 will be a good year.