News from Notch Consulting, Inc.

On Thursday, Orion Engineered Carbons released their results for Q1 2020, reporting a 12.7% drop in sales and a 10.5% decline in volumes relative to Q1 2019. Declines were sharpest in Rubber Carbon Blacks, which showed a 14.6% decline in sales and an 11.1% decline in volumes. Specialty Carbon Black saw a decline of 9% in sales and 8.8% in volumes during the quarter. Specialty black demand was down mainly due to “weakening demand in the North America and Western Europe regions predominantly in the automotive and pipe markets.” Rubber black demand was down due to a “sharp decline in sales volumes beginning in mid-March as tire and auto manufacturing plants closed due to COVID-19.” Orion also attributed lower Rubber Black volumes to a “strategy as part of 2019 contract negotiations to emphasize raising price closer to reinvestment levels over volume.”

A few key takeaways from the earnings announcement:

• OEC reported that all of its plants continued to operate during the quarter but the company implemented a flexible production schedule whereby reactors are run for a few weeks to restock inventories, then shut down.
• OEC plants were at about mid-40s percent utilization in April.
• More than 75 percent of tire plants served by OEC were fully or partially idled in April.
• OEC expects tire manufacturing plant restarts to occur slowly.
• In contrast to the tire market, only a few specialty customers were idled.

OEC will hold its earnings call on Friday, May 8 at 8:30 a.m. (EST).

On April 27, LG Chem announced that it will expand carbon nanotube (CNT) production at its plant in Yeosu.  LG Chem will be expanding by 1,200 tons, increasing total production capacity to 1,700 tons.

CNT is a new material with superior properties used in batteries, semi-conductors, auto parts and aircraft fuselages.

The expansion is designed to target the rapidly growing global EV and CNT markets and accelerate LG Chem’s product structure advancement strategies.