Cabot boss sees no green shoots in China automotive sector

London – Cabot Corp. chief executive officer Sean Keohane sees "continued weakness in China automotive and OE auto production" – a major market for rubber products. 

"Automotive production continue to weaken throughout 2019 particularly in China and Europe, and the second half recovery expected by IHS never materialised," said Keohane said in an earnings call 5 Nov. 

According to the Cabot official it has now been about 15 months of consecutive year-over-year declines and in the full year of 2019, on a calendar year basis, automotive production will be in negative territories.

“We don't yet see anything turning there although there are some signals that the government is looking at stimulus measures to get that trend arrested," said Keohane without pointing to the signals.

The government measures, according to the Cabot official, are in place due to the important role of the automotive sector in the overall Chinese economy.

With the US-China trade friction still weighing on the Chinese economy, the CEO said he did not yet see any signals of improvement, while there were no “real significant worsening” either. 

"The trade friction between the US and China is having an impact on global growth and is seen as a key driver of the deceleration," the Cabot boss added.

Despite the slowdown, Keohane has previously expressed optimism in the Chinese market over the long-term. 

In his previous conference call in August, the Cabot CEO said Cabot believed that China would be making “almost 40% of the world's tires and carbon black.” 

“China still has the largest car parc in the world and many of these cars have yet to hit their replacement cycle,” noted Keohane.