Total company selling and administrative and research and development expenses were $42 million for the fourth quarter of 2012. This compares to $52 million in the same period last year. Excluding pension related charges in both years, the year-over-year decrease was $3 million driven by lower administrative expense as a result of right sizing and austerity initiatives taken throughout the year to proactively manage costs in a difficult operating environment.
Interest expense was $8 million in the fourth quarter of 2012 compared to $5 million in the same period of the prior year. The increase was driven by the issuance of the Senior Notes in November 2012 and higher borrowings associated with the share repurchase program.
Based on current International Monetary Fund (IMF) projections, the estimate for global GDP growth in 2013 is 3.5 percent, a slight downward revision from IMF’s last projection in October 2012. The IMF notes that, although global economies are expected to recover at a gradual pace, downside risks remain significant. The IMF highlights that recessionary conditions in Europe persist and that the Euro region continues to pose the largest downside risk to the global outlook. Emerging markets and developing economies are forecast to grow 5.5 percent in 2013, a gradual improvement from 2012.
According to the World Steel Association and other published reports, global steel production is expected to increase 3.2 percent in 2013. However, steel customer confidence and profitability remains low due to the continued economic uncertainty, particularly in Europe. Overall, we expect higher volumes in our Industrial Materials segment in 2013 due to a restocking of inventory and an improvement in steel production levels across our global customer base.
The graphite electrode market has become increasingly competitive with the addition of approximately 100,000 metric tons of capacity coming on line over the past year, of which approximately 65,000 metric tons are located in China. An estimated 130,000 metric tons of additional graphite electrode capacity expansions have also been announced, of which approximately 100,000 metric tons are located in China, and are projected to be operational in 2013/2014, although several of these announced projects may be postponed. These new additions have further exacerbated a challenging global graphite electrode industry, which already had excess capacity.