Orion rides high on tire-market growth, Chinese regs

Luxembourg – Orion Engineered Carbons SA has reported a 20.1% year-on-year rise in rubber black revenue at $249 million in the second quarter.

Group earnings, meanwhile, grew 38.4% to $36 million in the second three months of the year, the company’s figures issued 2 Aug show.

The gains were linked to growth in rubber-grade sales, pass-through of higher feedstock costs to customers with index-pricing agreements, positive exchange rate effects, increased sales volumes and base price improvements.

“Healthy demand for rubber blacks has kept our plants operating at a high utilisation rates,” said Jack Clem, Orion’s chief executive officer.

“The largest contributor to capacity build in recent years has been China. This has halted due to regulatory pressures and significant changes in feedstock economics,” noted a company presentation.

Addition of new tire capacities in Europe and the US, and economic recovery in Latin American, have also contributed to stronger demand in these regions, Orion also pointed out.

According to Clem, the “favourable” supply/demand balance will support stronger spot pricing during the year and establish “a strong backdrop for the negotiations in this segment for next year.”

Over the second quarter, Orion completed the realignment of its South Korean production footprint, which it launched in 2016. This included the consolidation of production at Bupyeong (Incheon) facility in Seoul and opening of new speciality and rubber carbon black lines in Yeosu, South Korea.

Additionally, in China, the company said it is continuing to improve its technical rubber grade mix.

“These continuing initiatives to improve production capability, upgrade mix and improve prices, along with favourable demand/supply dynamics, position us well to take full advantage of improving global economic conditions,” concluded Clem.