Analysis: Rough ride for carbon black makers

Like other supplier sectors, the carbon black industry has been severely hit by tire and automotive plant shutdowns and slowed demand caused by Covid-19 outbreak.

As a best-case scenario, market analyst Notch Consulting predicts a decline of 11% in the global carbon black market for 2020 while a mid-case scenario indicates towards a 23% and a worst-case scenario would see a 37% drop. 

"Right now, based on other forecasting and preliminary results for Q1, it looks like the year is coming in between Best Case and Mid-Case," Notch president Paul Ita said in reply to ERJ's questions about current trends.

According to Ita, at best that will likely mean declines of between 12% and 15% in demand for tire & rubber raw materials worldwide. 

While the Chinese carbon black market fared the worst in the first quarter of the year, manufacturers elsewhere are expected to hit a low-point in the second quarter.

US carbon black makers Cabot Corp. and Orion Engineered Carbon, for instance, reported 'solid demand' in Europe and Americas through to mid-March, before customers began cancelling orders.

"Orion executed well in the first quarter and we were on track for strong financial results until the latter half of March when many tire customer plants shut down," said its CEO Corning Painter.

The US company's rubber segment saw further declines in April, as the pandemic spread across Europe and Americas.

"Against this backdrop, in April Orion's plants operated in the mid-40s [percentage utilisation rates] in the Americas and Europe and in the mid-50s in Asia," the CEO noted.

Boston, Massachusetts-based Cabot reported a similar trend, now expecting its third-quarter (to 30 June) volumes to be "significantly impacted by tire and automotive customer shutdowns in the Americas and Europe."

The market, said Cabot senior executive Bart Kalkstein, is expected to follow a 'similar pattern' to those in the automotive and tire sectors.These markets are set for a 15-20% decline predict consulting agencies such as IHS and LMC. 

The president of Cabot's reinforcement materials segment is, however, cautiously optimistic, as sharp drops in the past have been followed by a strong rebound.

"The question remains as to when and how quickly the rebound will occur," Kalkstein said in written comments to ERJ.

Read the full article in the May/June 2020 issue of European Rubber Journal magazine