Cabot exec sees 'light at end of tunnel' for automotive OE market

Nuremberg, Germany – Cabot Corp. expects a continued strengthening in demand for its rubber carbon blacks as markets recover from the Covid downturn and the automotive industry slowly returns to normal.

The short-term outlook for the global market is expected to remain strong as “customers continue to produce tires,” said Jaume Campaña, Cabot’s VP & regional business director, reinforcement materials segment, EMEA, in an interview with ERJ.

Despite the recession and high oil & gas prices, people are travelling more by car, for example to go on holidays, said Campaña, noting that the tire market is 70% replacement, or even higher.

“Furthermore, inventories were down during Covid and we see customers rebuilding inventories," he said.

“So, the replacement market looks strong, although there is a lot of uncertainty with regards to a possible recession and inflation,” Campaña added.

The OEM market, on the other hand has been very weak and Europe saw a 17% year-on-year drop in car sales in May, the Cabot executive pointed out.

“However, when we speak to our customers whose speciality is to supply to the OEM market, they say they can see the light at the end of the tunnel, meaning that the orders are increasing," he explained.

According to Campaña, this indicates that the microchip shortage crisis, which has crippled the automotive industry for the most of 2021, could finally be easing.

“If you talk to OEMs, they will tell you that their order books are full, and these are orders taken a year ago.

“So, a combination of strong replacement and if you can call it a 'rebound' in OEM markets gives us confidence about 2022,” he concluded.