This month, Notch Consulting published the 2015 edition of the Carbon Black World Data Book, the most widely read and authoritative report on the $16 billion global carbon black industry. Published annually and updated quarterly, this 355-page report provides extensive proprietary data on carbon black supply and demand. The report provides detailed coverage for 26 leading countries, as well as demand for 16 smaller national markets. Historical data are provided for all years from 2004 through 2014, with forecasts for all years through 2020, as well as 2025. Data provided for each country and region include carbon black capacity by company and plant, capacity utilization, production, imports, exports, demand, markets (passenger car tires, truck/bus tires, other tires, non-tire rubber, and specialty blacks), grades (tread, carcass, and other), as well as market value and average pricing. The report is provided in printable PDF format and includes a separate Excel spreadsheet with substantial additional data. Contact Notch Consulting at firstname.lastname@example.org for more information or to order.
August 31, 2015
This month, Notch Consulting published a new edition of the Rubber Chemicals Market Update, an annual overview of the global rubber chemicals industry. This report provides current conditions and future prospects for antidegradants (6PPD/IPPD, TMQ, and other antioxidants), accelerators, and other chemicals (including tackifiers, adhesion promoters, reinforcing resins, retarders and antiscorch agents, homogenizing agents, peptizers, and blowing agents). The new issue is 39 pages with 19 tables. As always, the report includes a separate Excel spreadsheet that provides regional demand data, production capacity for leading suppliers, and a list of recent and proposed capacity expansions. The report also provides an overview of the tire and rubber industry, including a status report on recent and proposed expansions in tire plant capacity. The new edition also provides rubber chemical sales by company and major product segment. Contact Notch at email@example.com for more information or to order.
August 24, 2015
I’m late to this news due to summer vacation, but over the last several weeks, four of the five carbon black producers in the United States announced price increases. One primary driver for these increases is the widening differential between Platts prices used as the basis for formula contracts and the actual laid-in cost of feedstock. Another driver has been high inflation and currency volatility in South America. Details of each announcement are below.
Company: Cabot Corporation – Reinforcing Materials
Date of announcement: July 30, 2015
Effective: September 1, 2015 or as customer contracts allow.
Increase: NAFTA (North American Free Trade Agreement): 4%;
South America: 2%;
EMEA (Europe, Middle East and Africa): 7%;
ASEAN (Association of Southeast Asian Nations): 6%;
In addition to these increases, Cabot is making an additional price adjustment of 14% in South America to account for the impact of local currency devaluation and cost increases in Brazil and Colombia. Cabot is also modifying all pricing formulas in those countries to mitigate future currency fluctuations.
Rationale: “In most regions, carbon black producers utilize oil-derived feedstocks that are specifically selected for the production of carbon black. Historically, certain fuel oil indices have been used as a proxy for the cost of these feedstocks, and Cabot’s costs have typically tracked to these indices over time. However, the actual costs of carbon black feedstocks relative to fuel oil indices have been rising. This widening difference between the indices and actual costs has persisted since early this year, and is forecasted to continue into the future.”
Company: Cabot Corporation – Specialty Carbons
Date of announcement: August 17, 2015
Effective: September 17, 2015, or as contracts allow
Increase: Up to 6% globally
Rationale: “This price increase is required due to escalating operating, logistics, currency devaluation and environmental compliance costs.”
Company: Orion Engineered Carbons
Date of announcement: August 6, 2015
Effective: September 15, 2015
Increase: Asia Region: 7%;
EMEA (Europe, Middle East, Africa: 8%
North America: 6%
South America: 12%
NOTE: These increases are in addition to the applicable raw material adjustments. Further adjustments may be applied for certain special Rubber Black grades.
Rationale: “Over the past several quarters Orion has experienced increased feedstock costs relative to the reference indices commonly used in the pricing of carbon black . . . These cost differentials are expected to continue due to increasing demand for these raw materials and lower availability of feedstocks of suitable quality. In addition to feedstock cost pressures, Orion has experienced extreme currency volatility in Brazil . . . therefore, our prices in local currency for product sold in South America require larger increases.”
Company: Birla Carbon
Date of announcement: July 31, 2015
Effective: October 1, 2015, or as supply agreements are renewed
Increase: 10%-12% for all rubber carbon blacks in North America
Rationale: “This measure is necessary to ensure the sustainability of our business and to make continued investment in processes and product possible.”
Company: Sid Richardson Carbon & Energy
Date of announcement: August 7, 2015
Effective: October 1, 2015
Increase: $0.04/pound for all spot purchases. For customers purchasing under annual contracts, current formulas will be honored until the agreement expires.
Rationale: Though not included in the announcement, a Sid spokesperson indicated that the increase was based primarily on the cost of reinvestment in the business, including hopper cars.
August 23, 2015
Quartz has some astounding high-rez photos of the aftermath of the Tianjin blast earlier this month that killed an estimated 85 people. The deadly explosion devastated one of China’s busiest ports, and the full economic, social, and human costs of the disaster are still being tallied. We are still in the process of determining the extent to which the disaster will affect the tire, rubber, carbon black and chemical sectors in the near and long term.
July 21, 2015
Carbon Black China 2016 will be held at the Hainan New Yantai Hotel in Haikou, Hainan province from March 18 through 22, 2016. CBC is held in China every other year (the 2013 conference was held in Kunming). This will be the 15th session for this prestigious conference, which is always comprehensive, well organized, and well attended. Notch will present a keynote address at the conference. More information as details are released. Hainan is China’s southernmost province, a tropical island in the South China Sea.
July 18, 2015
This week, Hankook TIre announced it has successfully completed its ride and handling tests for its latest non-pneumatic tire (NPT), iFlex. Hankook has been researching NPT technologies since 2011, and the iFlex is the fifth NPT concept tire that Hankook has released.
According to Hankook:
The company put the iFlex through a serious of rigorous tests designed to push the tires to their limits in five categories: durability, hardness, stability, slalom (zigzag) and speed. In the speed test, the electric car equipped with iFlex tires reached 130km/h. The impressive results in all five categories demonstrated that the NPTs could match conventional tires in terms of performance. At the same time, these results are expected to help the company solidify its position as a global top-tier tire company and, give new momentum to its future-oriented R&D capabilities.
Construction of the iFlex is centered on a new type of uni-material designed to maximize the tire’s eco-friendly potential. From a manufacturing standpoint, the material used during product construction significantly enhances the energy efficiency. From a product standpoint, the material allows the iFlex to be recycled with greater ease. Hankook Tire then went one step further, integrating new tire construction techniques to simplify the manufacturing process from eight stages to just four, thus further reducing the company’s carbon footprint.
This Hankook promotional video from 2013 shows the basic concept:
July 7, 2015
On July 1, Solvay held a ceremony to mark the beginning of production of highly dispersible silica at its new plant in Wloclawek, Poland. The plant will serve Central and Eastern Europe, with a focus on energy-saving tires. With 85,000 tons of annual capacity dedicated to Solvay’s latest HDS technologies it will create more than 100 jobs in the Pomeranian region. The site will produce Solvay’s most advanced grades of HDS, a reinforcing agent in the tire rubber that reduces rolling resistance and improves fuel economy. Solvay’s HDS brands include Zeosil® PREMIUM and Efficium®, another Solvay Silica invention, which helps tire makers to raise productivity levels for both car and truck tire compounds. With Wloclawek, Solvay’s Silica has a strong global footprint with nine sites across Europe, South America, North America, and Asia. In South Korea, Solvay is building a plant that will also produce Efficium® and, once on stream, raise Solvay’s annual silica capacity by close to 50 percent between 2014 and 2016.
June 9, 2015
Last week, The Goodyear Tire & Rubber Co. announced that it has reached agreement with Sumitomo Rubber Industries, Ltd. (SRI) to dissolve the global alliance between the two companies. Goodyear and SRI formed the global alliance in 1999. It primarily consists of four joint venture operating companies, one each in North America and Europe, and two in Japan. The agreement announced today, when closed, would resolve the pending arbitration filed in January 2014. Details of the dissolution are below.
Overview of Agreement
North American Joint Venture
- SRI (currently 25 percent interest) will acquire Goodyear’s 75 percent interest in Goodyear Dunlop Tires North America, Ltd. (GDTNA), which primarily manufactures and sells Dunlop-brand tires in North America, including full ownership of the joint venture’s tire plant in Tonawanda, N.Y.
- Goodyear will retain exclusive rights to sell Dunlop-brand tires in both the consumer and commercial replacement markets of the United States, Canada and Mexico as well as to non-Japanese vehicle manufacturers in those countries.
- In addition to assuming full ownership of the Dunlop motorcycle tire business in North America, SRI will have rights to sell Dunlop-brand tires to Japanese vehicle manufacturers in the United States, Canada and Mexico.
European Joint Venture
- Goodyear (currently 75 percent interest) will acquire SRI’s 25 percent interest in Goodyear Dunlop Tires Europe B.V. (GDTE).
- Goodyear will retain exclusive rights to sell Dunlop-brand tires in both replacement and original equipment consumer, commercial, motorcycle and racing markets in European countries where the current joint venture exclusively serves the market.
- SRI will obtain exclusive rights to sell Dunlop-brand tires in certain countries that were previously non-exclusive under the global alliance, including Russia, Turkey and certain countries in Africa.
Japanese Joint Ventures
- Goodyear (currently 25 percent interest) will acquire SRI’s 75 percent interest in Nippon Goodyear Ltd., which serves the replacement market in Japan with Goodyear-brand tires.
- SRI (currently 75 percent interest) will acquire Goodyear’s 25 percent interest in Dunlop Goodyear Tires Ltd., which serves the original equipment market in Japan with Goodyear- and Dunlop-brand tires.
- Goodyear will regain exclusive rights to serve the Japanese replacement and original equipment markets with Goodyear-brand tires.
- SRI will continue to have exclusive rights to sell Dunlop-brand tires in the Japanese replacement and original equipment markets.
Financial Terms of Agreement
Under the terms of the agreement, Goodyear will pay SRI $271 million upon closing of the transaction, which is expected in the fourth quarter of 2015. The transaction does not impact the company’s existing 2015 and 2016 financial targets or capital allocation plan. The outlay is included in the approximately $600 million designated for restructurings under the capital allocation plan. In addition, Goodyear will repay a pre-existing debt of approximately $55 million to SRI within three years from the date of closing. As a result of the agreement, Goodyear will also sell its 3.4 million shares of SRI common stock.
Goodyear expects the transaction to be accretive to its earnings beginning in the first quarter of 2016, related mainly to the elimination of minority interest in GDTE. Based on the company’s 2015 operating plan, the annual benefit to adjusted net income would be approximately $40 million to $50 million (15-18 cents per share).
The transaction is subject to customary closing conditions, including the receipt of regulatory approvals as well as SRI’s completion of a labor agreement with the United Steelworkers union for the Tonawanda plant.
Continental AG announced last week that it is expanding its tire plant in Hefei, China. The project will see the gradual ramp-up of the current production capacity of five million car tires per year to 14 million units by 2019. Capacity for bicycle tires will increase from 2 million units/year at present to 13 million units/year by 2025. To date, Continental has already invested €250 million in the Hefei plant and by the time the agreed investment plans have been realized the total will have surpassed €500 million.
June 8, 2015
On June 3, Munich-based Pyrolyx AG announced it had completed its merger with cct Stegelitz GmbH. cct will be integrated into the Pyrolyx Group, which will make the merged company the world’s largest producer of rCB (recovered carbon black). Pyrolux is expanding the production capacity of cct’s plant in Saxony-Anhalt, Germany.
Press release below: