Cabot to close carbon black units at Stanlow, UK; Berre, France

ERJ staff report (DS)

Boston, Massachusetts -- Further to yesterday's announcement of plant closures, Cabot has said it will close carbon black facilities in Stanlow, UK and Berre l'etang, France. It will also mothball two further carbon black plants in Merak, Indonesia and Sarnia, Canada and it will delay the start-up of the rubber blacks capacity in Tianjin, China.

Cabot said a carbon black masterbatch unit for the plastics industry located in Dukinfield, UK will also close, as will the tantalum powder manufacturing operations at Boyertown, Pennsylvania and a regional office in Kuala Lumpur, Malaysia.

ERJ lists the Berre l'etang plant in France as having capacity for a around 110 kt/year, while the Stanlow unit has capacity for 90 kt/year. The Indonesian unit has capacity for around 40kt/year. Patrick Prevost, ceo of Cabot said the moves, "represent approximately 250 to 300,000 tons of capacity, of which approximately 150,000 tons is going to be closed permanently. Prevost noted that total capacity taken off line is around 16 percent of Cabot's total carbon black capacity. He added, "we are in the process of concluding the build of 150,000 tons of capacity in Tianjin, China."

Discussing capacity utilisation, William Brady, general manager of Carbon Black Business Group said North American capacity usage had been low in November and December. But had picked up in January and, " is running at not bad utilisation levels." European levels are currently low, but will improve once the UK and French plants were closed. He said Asia Pacific is also still running at low capacity utilisation, but China is starting to pick up once more.

Discussing the 29 percent reduction in demand for carbon black, Prevost said some of this was due to de-stocking among the main customers. He said, "Right now, 30% in my view is, not a normal level and I believe that the non-discretionary nature of the tire industry, which should be bringing us back to levels that are more acceptable and that with the restructuring that we're undertaking, that should bring our margins and our profitability level to more acceptable levels." Prevost noted that "one of our global tyre customers who was down somewhere around 26, 27% in that October to December quarter, felt that possibly about half of that decline was destocking related."

He noted that during the December period orders had been coming in, but with no suggestion of what future orders might be placed. Normally, he noted, customers give some indication of heir needs for the coming weeks, but over during December, those forecasts did not arrive. "we are starting to see forecasts coming through again from some of customers meaning that potentially further down the chain the destocking may have bottomed out as well. "

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SEC filing from Cabot

Transcript of conference call from Seeking Alpha website