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GrafTech shares fall on worries about 2013

NEW YORK (AP) -- Shares of GrafTech International Ltd. fell Monday on investor worries that the company's prospects for 2013 might be worse than previously expected and result in less profit for the year.

THE SPARK: Jefferies analyst Luke Folta cut his rating for GrafTech stock to "Hold" from "Buy" and reduced his price target by $6 to $9. He said that checks on 2013 contract negotiations show that demand for some of the company's key products has weakened, which will force GrafTech to lower prices.

THE BIG PICTURE: GrafTech sells products used in steelmaking and other industries. Like other industrial companies, it has struggled this year as a result of tough global economic conditions and weak spending.

In October the Parma, Ohio, company said third-quarter net income fell because of the sluggish economy, but it still managed to beat Wall Street predictions.

THE ANALYSIS: Folta said weak market conditions will result in significant year-over-year drops in prices and a more intense global competitive environment.

"Earnings in 2013 will decline year-over-year under these conditions with potential improvement in pricing later-cycle too far from sight to benefit GrafTech's valuation near term," Folta wrote in a note to investors.

THE SHARES: Down 78 cents, or 8.1 percent, to $8.85 in heavy morning trading, after falling as low as $8.70 earlier in the session. Over the past 52 weeks, the stock has traded between $8.45 and $17.69.

Since the beginning of this year, GrafTech shares have lost about a third of their value.