Orion rubber black volumes decline amid weak demand

Houston, Texas – Orion SA has seen demand for rubber blacks decline over the first nine months of 2023, due in part to a soft truck tire markets and recent automotive strikes in the US.

Volumes for the three months to end of September declined by 3% year-on-year to 185.3 kilotonnes, the carbon black maker reported 2 Nov.

Third quarter net sales declined by 15.4% year-on-year to $315.8 million (€297 million), primarily on 'pass-through' effects linked to declining oil prices, as well as lower volumes.

These effects, according to the Houston-based supplier, were partially offset by improved contractual pricing.

Adjusted earnings (EBITDA) increased 3.6% to $51.2 million for the quarter, on improved contractual pricing, partially offset by lower volumes and 'cogeneration profitability'.

Orion linked the softer demand for its carbon blacks to weak replacement tire markets both within the passenger car and heavy truck segments.

Meanwhile, disruption due to strikes in the US automotive industry affected OE demand in the passenger car tire market.

Over the first nine months of 2023, Orion's rubber black business noted a 5.4% year-on-year dip in volumes to 539.5 kilotonnes, with sales down 7.3% at $964 million.

Adjusted earnings were up by nearly 35% at $172.4 million, primarily due to improved contractual pricing, partially offset by lower volume and cogeneration profitability.

Looking ahead, Orion CEO Corning Painter said: “We are confident that we can deliver a third consecutive year of earnings growth, despite lower demand.”

In terms of tire demand, Painter said trends towards greater tire-making capacity in North America and Europe and “valuing local supply” should help drive growth.

“Our 2024 rubber business negotiations for EMEA and the Americas are nearing completion and we expect to wrap them up in the next month or so,” he added.

Having commissioned its final US air emission controls system, Painter said Orion would now focus capex on “profitable growth, reducing debt leverage, and returning value to shareholders.”