Cabot expects recovery in China carbon black demand

Boston, Massachusetts – Cabot Corp. has reported double-digit growth in sales and earnings (EBIT) within its reinforcement materials segment for its fiscal first quarter to end of December

The unit, which manufactures carbon black and engineered elastomer composites, saw an 11% year-on-year increase in earnings (EBIT) to $94 million (€88 million), on 14% higher sales of $643 million.

The increased earnings were principally driven by improved unit margins from higher pricing and improved product mix in customer agreements, Cabot reported 9 Feb.

The gains, it added, were partially offset by lower volumes due to year-end destocking, the impact from Covid-19 restrictions in China and currency effects.

“We are seeing signs that customer destocking is coming to an end as January volumes outside of China have improved from December volume levels,” said president and CEO Sean Keohane.

Cabot expects continued volume and margin impacts in the second quarter related to Covid outbreaks in China, Keohane went on to explain.

However, he added, the company anticipates “recovery in demand in China” as the second quarter progresses.

In terms of segment performance, Keohane expects the reinforcement materials segment to benefit from calendar year 2023 customer agreements that took effect in January.