On May 15, Asia Carbon Industries announced results for the quarter ended March 31, 2013. Net sales for the quarter totaled $5,963,945, down 53% from the same quarter of 2012. Income for the quarter was $389,953, down 78% from the same quarter of 2012. This sharp drop in sales and income were attributable to a major conversion project that the company is carrying out on three of its four production lines, which are being upgraded to produce specialty grades of carbon black, which is expected to be completed in 3Q 2013. This project was explained in detail in the company’s previous quarterly results announcement:
In the fourth quarter of 2012, the Company began converting its three dry production lines to special carbon black (“SCB”) production lines. SCB has a broader range of use compared to the more traditional products including use as a pigmenting agent, UV stabilizer or conductive agent in a variety of products, such as plastics, toners and printing ink and coating, battery and electrical parts. Management believes SCB will generate more revenues as a result of higher sales prices. The conversion affected the Company’s operating results of 2012 since the three dry production lines ceased operations during the fourth quarter. The cost of the project is estimated at $4 million and will be funded by the cash from the Company’s operations.
In addition to the product upgrades, in June 2012, Asia Carbon Industries began construction on a 3000 KW power plant that uses residual exhaust gas generated by carbon black manufacturing. The new power plant is expected to satisfy the company’s electricity needs for its current production lines. The cost of the construction of the plant is $6.4 million, and also was funded with cash from operations. In March 2013, the company reported that the new power plant was complete and in its testing phase.
The company’s current product line consists of two hard grades (N220 and N330) and one soft grade (N660) as well as naphthalene oil, a by-product of its production process.
On May 10, 2013, Evonik Industries announced plans to build a new precipitated silica plant in Americana, Brazil by the end of 2015. The cost of the plant is in the “middle double-digit million-euro range,” according to Evonik. The plant’s capacity was not released, though the new plant is part of a larger expansion plant that will raise Evonik’s total silica capacity by 30% from 2010 levels. Evonik Industries has started basic engineering for the plant, which is subject to the approval of the responsible bodies. The plant will be Evonik’s first slica plant in South America. Evonik’s silica is marketed under the ULTRASIL® brand name for energy-saving tires with low rolling resistance while SIPERNAT® grades are used in the feed and food industry as well as the paints and coatings industry.
According to Evonik, in South America, and in Brazil in particular, demand for precipitated silica is rising due to significant growth of the local automotive industry, on the one hand, and a rising demand in the area of life-science and in agriculture, on the other, for example as a dosing aid for animal feed. “In our expansion course, we aim to accompany the growth of our global key customers, particularly in the tire industry,” says Dr. Thomas Haeberle, member of the Evonik Executive Board and responsible for the company’s Resource Efficiency Segment. Evonik expects additional demand due to a planned labeling obligation for fuel-saving tires in Brazil.
Here is the full press release.
UKIP’s Transportation Weight Loss Diet Conference will be held next month in Stuttgart. The two-day conference focuses on reducing vehicle weight and decreasing carbon footprints in transportation equipment, including the aerospace, automotive, and rail sectors. The conference will be held in Stuttgart, Germany on June 5-6, 2013. Details are here.
ICIS, a chemical consulting firm, has announced the 2nd ICIS Butadiene and Derivatives Conference, a two-day conference focussing on the butadiene value chain, from feedstock to downstream derivatives and end product markets. The conference will be held in Berlin from September 10-11, 2013. The first Butadiene and Derivatives Conference was held September 11-12, 2012, also in Berlin. Details for the conference are here.
LANXESS reported lower-than-expected earnings in its first quarter due to a weak market environment, particularly in the tire and automotive industries. First-quarter sales were down by 12 percent year-on-year to EUR 2.1 billion, mainly due to lower volumes and fallen selling prices.
Sales in the Performance Chemicals segment, which includes both the Rubber Chemicals and Rhein Chemie businesses, decreased by 7 percent to EUR 520 million. Volumes declined as a result of the weak demand from the construction industry due to the long winter and from the business units linked to the tire industry. Selling prices were stable. EBITDA pre exceptionals, at EUR 51 million, was EUR 32 million below the prior-period figure.
LANXESS anticipates a slight improvement in business for the second quarter. “The weak demand from the tire and automotive industries persists, but customer destocking is slowing down. We currently anticipate EBITDA pre exceptionals in the second quarter to improve sequentially but to be below EUR 220 million,” said LANXESS’ Chairman of the Board of Management Axel C. Heitmann. “The market environment will remain weak and volatile with low visibility persisting. We nevertheless expect an economic improvement in the second half of this year. Asia, particularly China, will perform substantially better, whereas market conditions in Europe will remain difficult.”
Japan Chemical Web reports that Denki Kagaku Kogyo is considering the construction of a new plant for acetylene black, an electrically conductive type of specialty carbon black that is finding increased use for the cathode materials of rechargeable lithium-ion batteries. Denki Kagaku Kogyo plans to make a formal decision by the middle of this year on the project, which involves the construction of 3 bn yen ($30.1 mn), 6,000-t/y facility in its plant in Chiba Prefecture. The facility would start operation by the end of fiscal 2014. The company currently produces acetylene black in Japan at its Omuta plant in Fukuoka Prefecture and at a plant in Singapore.
Cabot Corporation announced today that the Board of its joint venture carbon black company, Cabot Malaysia Sdn. Bhd. (CMSB), has decided to cease carbon black production at its Port Dickson, Malaysia, facility by the end of July 2013. Customer shipments from the plant are expected to continue for a period of time after production has been shut down. Cabot holds a 51 percent equity share in CMSB.
Dave Miller, president, Reinforcement Materials Segment, said in a press release, “Cabot and the CMSB Board have reached the decision that our carbon black plant in Malaysia is not well positioned to efficiently serve our customers in Southeast Asia on a long-term basis.” The closure, which will affect approximately 90 carbon black employees, was because of the facility’s manufacturing inefficiencies and raw materials costs.
The closure of the plant is expected to result in one-time cash and non-cash charges to the joint venture of approximately $13 million and $15 million, respectively. Annual savings for the joint venture are estimated to be approximately $7 million. Cabot owns 51 percent of the CMSB joint venture.
Following up on yesterday’s news that Aditya Birla Nuvo is selling its Hi Tech Carbon business to a Birla holding company called SKI Carbon Black (India) Pvt., Bloomberg today reported that Birla plans to merge all its carbon black units into SKI and possibly sell shares in the combined company, quoting two people familiar with the matter. Columbian Chemicals Co., which Birla acquired in 2011 $875 million, will also be merged with SKI, according to Bloomberg. The combined business is essentially tied with Cabot as the world’s largest producer of carbon black. The new entity may sell shares in an initial public offering as early as next year, Bloomberg sources said.
Aditya Birla Nuvo announced today that it will sell its carbon black business, Hi Tech Carbon, to another Aditya Birla Group holding company called SKI Carbon Black (India) for Rs 1,451 crore. The move is widely seen as an attempt by the Kumar Mangalam Birla-controlled group to consolidate its carbon black business under one roof as a precursor to a global listing. The sale was aimed at reducing debt and follows a decision by the company’s Committee of Directors that it would be “extremely challenging” for Nuvo to become a global leader as tire companies prefer global suppliers while Nuvo’s Hi Tech Carbon subsidiary produces only at three plants in India. SKI Carbon Black (India) is the India arm of the group’s Mauritus-based holding company for the carbon black business.
The signs of consolidation were visible in December 2011 when the Birla group had unified its global carbon black business under one roof, forming an organizational structure to cut costs and take advantage of the worldwide leadership in the business. The Birla Group has some 2 million tonnes of capacity for carbon black, including Hi Tech Carbon in India, Alexandria Carbon Black in Egypt, Thai Carbon Black in Thailand, Liaoning Carbon Black in China, and Colombian Chemicals, which is based in the US but has global operations in carbon black.
Rubber & Plastics News (subscription required) has details on a new consumer satisfaction survey from J.D. Power that indicates that owners of 2011- and 2012-model year cars in the US equipped with run-flat tires are less satisfied with their tires than owners of cars with standard tires. The findings are based on input from about 2,150 owners of cars with run-flats, about 7% of all respondents. Run-flats are installed primarily on luxury and performance sports cars and, while both groups were less satisfied with run-flats, the dissatisfaction was more pronounced among sports car drivers:
The difference in satisfaction level among owners of luxury vehicles vs. others was only about 1.5 percent, J.D. Power’s data show, while the difference among sports car owners was more than 9 percent.
The main complaint about run-flats was that they need to be replaced prematurely. According to the survey, 31% of customers with OE run-flat tires had to replace at least one tire in the first two years of ownership, compared to 19% for those whose vehicle was equipped with standard tires.