Notch Consulting has updated the Silica Market Update, which provides a comprehensive overview of current conditions and future prospects for the global precipitated silica industry. The report provides tables detailing silica demand by region, market, and application, current pricing by application and region (US, EU, China), nameplate production capacity by company, plant, and country, and recent and proposed capacity expansion projects. This update includes a breakdown of annual precipitated silica sales for leading suppliers by region and major application. The report provides annual demand for all years 2007 through 2015, while forecasts are provided for all years from 2016 to 2020 as well as 2025. Market segments covered in the report include tires, non-tire rubber, dentifrice, nutrition/health (food, ag feed, pharma, and cosmetics), and industrial (paper, battery separators, paints/coatings, other applications). Applications are reinforcing fillers, abrasives, thickeners, anticaking agents, carriers, extending fillers, battery separators, matting/flatting agents, antiblocking agents, and defoamers. Average pricing is provided for various grades for the US, the European Union and ChinaAs always, the report includes a separate Excel spreadsheet providing extensive supplemental data.
For more information on this report, please write to email@example.com.
MAKROchem, a carbon black distributor based in Lublin, Poland, is investing $7.5 million on its first distribution center in the United States, which will be located in an existing building in Lancaster, South Carolina. The 183,000-square-foot facility is expected to be operational this year, and the company will begin hiring up to 20 employees for the site in May. Jacek Niemczyk, MAKROchem’s North American project coordinator, has said that the new trans-loading station will supply North American customers with carbon black for tire and non-tire rubber markets. MAKROchem is a leading distributor of carbon black in Europe.
According to sources at MAKROchem, the new operation will import carbon black primarily through Charleston, as well as Norfolk, Baltimore, Greer Inland Port, and the Charlotte Inland Terminal. The site will offer 12,000 tons of warehousing capacity for supersacks, as well as up to 2,000 tons in bulk rail cars. The site will provide delivery of carbon black in bulk silo trucks and supersacks, with railcar delivery to be added by the end of 2016.
This week I’ve been at the Carbon Black China conference in Haikou, Hainan, China, where Notch was honored to present a keynote address on future prospects of the global carbon black industry. The Chinese conference is held every other year at different locations in China. The conference has been held for many years but was only opened up to international attendees ten years ago, in 2006. Notch has presented papers at the last three CBC conferences, held in Guilin, Hangzhou, and Kunming. The conference is heavily focused on the Chinese industry, and attendance is about 90% Chinese. The papers are quite comprehensive and detailed, with a level of information sharing that would be unusual in a Western conference. There is an assumption that if a Chinese company determines a better way to do something, they have an obligation to share their findings.
The mood at the conference was cautiously optimistic, as China’s carbon black industry had a very tough year in 2015. Production volumes in China declined year-over-year by 1.9% to just over 5 million tons — the industry’s first annual decline in some 20 years. Exports declined 13% in 2015 while domestic demand was flat. Selling prices fell sharply due to both lower feedstock and energy prices as well as intense price pressures brought on by overcapacity and a weak tire industry, which is also faces weaker demand and severe overcapacity. Fan Ruxin of the China Carbon Black Institute presented the results of the industry’s 12th Five Year Plan, which ended in 2015, along with a blueprint for improvements to be implemented in the 13th Five Year Plan, which began in 2016. Dr. Soumen Chakraborty of Himadri Chemicals & Industries presented an excellent paper on the Future Prospects of the Carbon Black industry, Michael Spahr of IMERYS Graphite & Carbon gave a talk on Conductive Blacks, and Anil Kumar of PVTI gave a talk outlining a 360 degree approach to the business. All in all another excellent conference from the folks at China Carbon Black.
Photos: Hainan Taoism Cultural Court
Kemya, a joint venture between Sabic and ExxonMobil, and Continental Carbon Company have officially announced the start-up of a new carbon black plant located in Al-Jubail, Saudi Arabia. The Kemya facility has a capacity of 50,000 mt and will primarily serve the tire industry. Continental Carbon provided the technology for the project, and the new plant incorporates the company’s latest technical advances. The products will be commercialized by Continental Carbon Europe, under the Continex tradename. Construction on the plant was completed around third quarter last year.
Monique Lempereur, Managing Director of Continental Carbon Europe commented: ‘This new plant represents a unique opportunity for Continental Carbon to develop and expand its presence not only in Europe, Middle East, and Africa but also in the Asia Pacific region. The new organization, headquartered in Belgium, south of Brussels, will offer its customers with a premier customer care support combined with a complete supply chain service. The license to Kemya is also bringing to the market a new competitive source of carbon black produced by a large and reputable joint venture.’
Here is the press release.
On March 18, Birla Carbon announced a restructuring plan for its operations in Europe and Africa. The company will shut down its carbon black plant in Hannover, Germany and will permanently remove one production line in Alexandria, Egypt. The plan also calls for a “significant reduction of regional corporate personnel.” Birla Carbon plans to consolidate operations at its remaining manufacturing sites in the region. The announcement did not include details for how many workers would be affected or how much capacity would be removed. The restructuring activities will begin immediately and are expected to be completed in 2016.
Here is the press release.
On Friday, Cabot Corporation announced that Patrick Prevost would resign as President and Chief Executive Officer effective March 11, 2016. He remains a member of the Board of Directors and an employee of Cabot Corporation. In December 2015, Cabot announced that Mr. Prevost would take a medical leave of absence due to a minor stroke.
Also on March 11, 2016, Cabot’s Board of Directors elected Sean D. Keohane President and Chief Executive Officer, effective March 11, 2016. Mr. Keohane was also elected a member of the Board of Directors and will serve on the Board’s Executive Committee. Mr. Keohane joined Cabot in 2002 and since November 2014 has been Executive Vice President and President of Cabot’s Reinforcement Materials segment.
The Nation, a Bangkok-based newspaper, reports that SKI Carbon Black (Mauritius), a subsidiary of Aditya Birla Group, has launched a tender offer for all remaining shares it does not own in Thai Carbon Black. Aditya Birla Group has been consolidating its carbon black under the SKI Carbon Black holding company over the last few years.
It would tender for 213.76 million shares or 71.25 per cent of Thai Carbon Black’s issued shares. At the price of Bt22 apiece, the deal will cost Bt4.7 billion.
The tender offer was filed to the Securities and Exchange Commission yesterday.
SKI recently boosted its stake in the Thai company to 28.75 per cent, which automatically forces it to launch the mandatory tender offer.
Established in 1978, Thai Carbon Black is a leading manufacturer of carbon black in Thailand with a capacity of 275,000 tonnes per annum, according to data on Aditya Birla Group’s website. It also has the capability of producing customised carbon black grades as per requirement. TCB has the unique distinction of supplying Carbon Black to all the six continents from a single location. It meets over 50% of Japan’s total Carbon Black imports and also supplies to other global markets including Indonesia, Philippines, Malaysia, China, Korea, Taiwan and Australia.
Yesterday, Orion Engineered Carbons (Luxembourg) announced that effective with shipments beginning April 1st, 2016, Orion will implement a “Carbon Black Oil Index Surcharge” for its Rubber Carbon Black Business Line segment’s sales into Europe. The surcharge will supplement Orion’s existing formula priced agreements for all rubber customers in Europe.
From the press release:
Due to the impact of energy market developments further described below, current Carbon Black sales prices no longer adequately cover Orion’s variable costs of production. For the sake of long term stability, Orion has to address these developments that have not been anticipated in the current price formulas used for Rubber Carbon Black sales. Orion established its existing Carbon Black pricing agreements with a view to passing along the carbon black oil (“CBO”) and other energy related cost to its customer base. This pass-through is based on a defined pricing formula which comprises a base price plus a raw material adjustment to cover the consumption and the CBO procurement cost. Orion believes this pricing mechanism has been beneficial for the customer base since it provided high pricing transparency and (under regular market conditions) fairness in monthly price adjustments. However, over the last nine months Orion has had to pay significantly more for the procurement of the required high quality CBO in Europe. Orion has not been able to pass-through these additional costs to the customer base via its pricing formulas. In summary, this situation is a result of the following:
• In Europe, the price development of light fuel oil as an underlying index no longer reflects the CBO purchase price development; Orion therefore needs to pay significant premium differentials above the fuel oil index for required clean, high quality CBO feedstocks. Only such clean, high quality feedstocks can assure the Carbon Black quality that Orion’s customer base is expecting and accustomed to.
• The reasons for the decoupling between the European fuel oil and CBO markets are beyond Orion’s control: there have been structural changes in all major CBO market categories which are lowering the availability of suitable CBO and independently increasing the demand for specific CBO qualities. Both effects drive CBO purchasing cost up and result in significant premium differentials which OEC must pay.
These effects lead to significant additional cost per ton of Carbon Black and erode the negotiated base prices.
Apart from this disconnect between CBO cost and the raw material adjustment, additional cost pressures have resulted from the CO2 certificate trading requirements in Europe.
Consequently, as discussed in our recent investor call, Orion needs to address the imbalance in formula pricing between feedstock cost and product pricing under current market conditions. Orion will therefore be adding a Carbon Black Oil Index Surcharge to the formula pricing mechanisms for Europe effective Q2/2016.
This measure is independent of the existing annual agreements. OEC will continue to honor these agreements pending annual re-negotiation, but is seeking this surcharge in the interim to ensure that the spirit of the existing contracts (“pass-through of oil cost”) continues to work.
Other regions outside Europe have witnessed similar conditions throughout 2015 and Orion may need to follow this move in those regions if CBO markets continue to decouple from the indices used in the respective local pricing formulas. Orion is convinced that a surcharge is the fairest and most transparent solution that addresses the underlying root cause and is in line with the spirit of the current formula pricing mechanism. Orion is committed to continue to offer unique value and partnership to the rubber industry by being a stable and reliable local partner.
From Bloomberg, more challenging news out of China as the government tries to address overcapacity in the coal and steel sectors:
China aims to eliminate production capacity of as much as 500 million metric tons of coal and 150 million tons of steel by 2020. Some coal mining companies last monthlobbied government officials, including Premier Li Keqiang, to set a price floor for coal to protect against bankruptcy and prevent job cuts, according to people with knowledge of the matter.
The Pittsburgh Post-Gazette had a story today about a project funded by the U.S. Department of Energy dedicated to the development of more fuel-efficient truck and bus tires. The project brings together PPG Industries and Bridgestone Americas and involves PPG’s new Agilon performance silica, which can reduce tread rolling resistance and thereby improve fuel economy, according to PPG. The DOE is providing $1.25 million to the development project, which aims to improve the fuel efficiency of large tires by 4% to 6%, while also improving traction and tread life. The prototype tires should be developed in about three years, according to PPG.
Research and development for the project is being conducted at PPG’s research center in Monroeville, Pennsylvania and at Bridgestone’s technical headquarters in Akron, Ohio. Agilon is produced at PPG’s plant in the Delfzijl, Netherlands, where capacity is being increased this year. Last month, PPG announced it also planned to add capacity to its silica plant in Lake Charles, Louisiana. The project will add 10,000 tons of capacity in the second half of 2016.