News from Notch Consulting, Inc.

March 31, 2008

Performance Fibers Plans to Idle Two Plants in Alabama

Filed under: Tire Cord — Notch @ 5:37 pm

On March 26, Performance Fiber announced that it would idle all manufacturing at its plants in Winfield and Scottsboro, Alabama. The action will idle polyester fiber converting operations at Winfield and fabric dipping operations at Scottsboro. The company cited reduced demand from US tire customers, combined with an increasingly competitive industry and higher operating and raw material costs, as factors driving the decision. The timing of the shut-downs will be determined by the transition period necessary to meet customer contracts.

Responding to similar conditions, Performance Fibers idled polyester fiber production at Scottboro in 2006, while maintaining a scaled-back fabric dipping operation at the site.

Here is the press release on the rationalization.

On March 10, Performance Fiber announced that it had completed the acquisition of INVISTA’s North American tire cord and polyester industrial filament businesses. The deal included four plants in the US and Mexico that manufacture industrial polyester, nylon-6 and tire cord fabric. Terms of the deal were not publicly disclosed.

Here is the press release on the acquisition.

March 30, 2008

Cooper Report Provides Excellent Overview of Tire Industry Conditions

Filed under: Tires — Notch @ 10:53 am

On February 28, 2008, Cooper Tire & Rubber published an 8-K report that contained a presentation entitled “Cooper Tire & Rubber Company Strategic Plan and Vision,” which was presented at the Millennium Hotel in New York. The report includes an excellent and comprehensive overview of the US and global tire industries. It’s essential reading for anyone interested in this industry.

You can find a copy of the report at Cooper’s website, under “SEC Filings.” It is the 8-K Current Report from 2/28/08.

Consumer Reports Gives Positive Report on Run-Flats

Filed under: Run-flats — Notch @ 10:43 am

Consumer Reports’ blog has just published an update on its ongoing investigation into the run-flat tires equipped on the Toyota Sienna AWD.

Now, at just over 30,000 miles, (30,247 miles to be exact, as shown) we’re impressed with the wear performance of the tires, which are projected to wear out at no less the 54,000 miles—comparable or better than conventional all-season tires.

For those of you just joining us, we purchased a new 2007 Toyota Sienna XLE AWD with the Dunlop SP Sport 4000 Self-Supporting Technology tires (DSST)—run-flat tires. After the road test was completed, we purchased a new set of Dunlop SP Sport 4000 DSST tires for a tread-life evaluation on our Sienna. The evaluation started at the end of March 2007 and now, one year later, the tires still are trucking on.

We wrote about the previous reports here.

March 27, 2008

CBp Carbon Changes Name to Millennium Energy Corp.

Filed under: Carbon Black, Tire Recycling — Notch @ 9:23 am

CBp Carbon Industries (called here CBp Carbon Green, Inc.) has changed its name and business.

Millennium Energy Corp. (OTCBB: MLME) (the “Company”) (formerly CBp Carbon Green, Inc.) is pleased to announce that it has changed its name to Millennium Energy Corp. effective March 26, 2008. The name change will better reflect the change of business direction from an intended pyrolysis technology license to uranium exploration.

How’s that for a change in strategic direction?

For those unfamiliar with CBp, I wrote about them previously here. They offer a tire pyrolysis process that is claimed to yield usable carbon black, which the company markets under the name CBp Green Carbon.

From their website:

This patented technology converts the by-products of tyre pyrolysis (heating in the absence of oxygen) into a nano-particle compound (CBp.), that is a competitive substitute for commercial carbon black, and a clean-burning gas that can be used to generate electricity.

Last month, CBp Carbon Industries announced that it was expanding an existing tire recycling plant in Hungary and building a new facility in Cyprus for start-up in August 2008. The announcement raised a few eyebrows in the carbon black industry with these statements:

Carbon black is presently priced on world markets at approximately $1600 per tonne (depending on the grade), having risen over the last few years from prices of about $300 per tonne. CBp is presently pricing its CBp Carbon Green at $1200 per tonne.

I don’t know where these “world markets” are, but no one is getting $1,600 per tonne for rubber blacks.

It is not yet clear if or how the announced change will affect these expansion projects. I am waiting to hear back from management. More to come.

Here is the press release on the name change.
Here is CBp Carbon Industries’ OTC listing.
Here is CBp Carbon’s website.

Update: According to this Form 10QSB for MILLENNIUM ENERGY CORP., the name change from CBp Carbon Industries, Inc. to Millennium Energy Corp. was related to a licensing dispute with a US-based company and had no effect on CBp Carbon Industries, Inc., which is based in Bratislava, Slovakia. I regret the error.

From the Form 10QSB

However, in November of 2007, we had a change of control of the Company and expected to change the business direction of the Company from interactive English language training courses to receiving a license of pyrolysis technology from Ariana Intervest Ltd., which technology had been licensed by CBp Carbon Industries, Inc. (a non-related company) under previous agreement with the patent holder. However, CBp Carbon Industries, Inc. later advised that it did not consent to the license of the pyrolysis technology from Ariana Intervest Ltd. to the Company and did not permit the use of the CBp name by the Company. Therefore, in March of 2008, the Company effected a name change to Millennium Energy Corp. in order to more closely reflect the new business direction of the Company, which is uranium exploration.

March 26, 2008

Lanxess Announces Worldwide Price Increase for Rubber Chemicals

Filed under: Rubber Chemicals — Notch @ 12:40 pm

On March 25, Lanxess AG announced a worldwide price increase for its rubber chemicals portfolio, effective April 1, 2008. The company attributed the increase to higher costs for raw materials, transport, and energy.

Depending on the region, the price increase per metric ton will comprise up to EUR 350 / USD 700 for vulcanization accelerators (Vulkacit), up to EUR 150 / USD 600 for antioxidants (Vulkanox), up to EUR 250 / USD 850 for antiozonants (Vulkazon) and up to EUR 500 / USD 750 for plasticizers (Vulkanol).

Here is a link to the press release.

March 24, 2008

Sid Rich Plans UTA for Borger

Filed under: Carbon Black — Notch @ 3:57 pm

Sid Richardson has scheduled a unit turnaround for a tread unit at Borger, Texas for April. The UTA will shut down Unit 4 for about 2 weeks. The company doesn’t expect the project to result in any supply disruptions. The project was originally scheduled for October/November but Sid moved it up due to the sluggish conditions in the US carbon black market. Notch expects that we will see more of this — accelerated maintenance schedules and perhaps some downtime for selected units — as the US industry tries to manage capacity most efficiently during the slowdown.

March 22, 2008

Michelin Presents New Generation of Green Tires at Geneva

Filed under: Carbon Black, Silica, Tires — Notch @ 12:01 pm

Michelin presented its latest generation of green tires, the Michelin Energy Saver, at the Geneva International Motorshow, held March 6-16. The tires were recently certified on Mercedes Class B and C vehicles, bolstering prior certifications on Volvo (C30 Efficiency, S80 and V70), Fiat (500 and Fiorino), Renault (Clio and Twingo) and Toyota (Yaris). The tires represent the fourth generation of Michelin’s green tire line, and were launched in Europe, the Middle East, South Africa and South America beginning in 2008. The tires use highly dispersible silica instead of carbon black in the tread compound to reduce rolling resistance.

By generating fuel savings of nearly 0.2 liters per 100 km in combined city and highway driving*, it reduces CO2 emissions by 4 g per km and the cost of a full tank of gasoline by almost €2.00 (or CHF 3.22)**. As a result, the tire pays for itself in 45,000 km.

*ISO test conducted by Germany’s TÜV SÜD Automotive in 2007 on store-bought 175/65 R14, 195/65 R15 and 205/55 R16 tires produced by five major-brand manufacturers.
**Based on a diesel-powered vehicle that consumes around 6 liters per 100 km with fuel priced at an average of €1.20 (CHF 1.93) a liter.

Here is the press release.

Michelin to Index OE Tire Pricing to Oil Prices

Filed under: Tires — Notch @ 11:03 am

Michelin plans to introduce a new pricing system for passenger and light truck tires sold into OE markets that will include an adjuster for oil prices. The change will take effect on April 1, 2008. According to Michelin, petroleum-based products account for nearly 60% of the cost of a passenger tire.

The press release is reprinted below. Here is a link.

Michelin Group Announces Price Increase and New Pricing System for Automaker Customers
(Paris – March 21, 2008) – In response to soaring oil prices, Michelin has introduced a new tire pricing system for customers in the automobile industry that will clearly distinguish the effects of petroleum-based raw materials from the intrinsic value of Michelin tires.

With petroleum-based products accounting for approximately 60 percent of the cost of a passenger car or light truck tire, the recent dramatic increase in oil prices has had an impact on the cost of Michelin tire.

As a result, Michelin will adjust its prices based on a scale indexed to changes in oil prices. The system is a pledge of transparency and clarity in Michelin’s relations with automakers.

Scheduled to take effect as of April 1, 2008, the new price schedule will be applied to all passenger car and light truck tires sold to automobile manufacturers worldwide.

March 20, 2008

Cabot Waverly Expected to Shut Down in March

Filed under: Carbon Black — Notch @ 1:32 pm

A quick update on the challenging conditions currently facing the US carbon black industry.

Cabot reports that its plant in Waverly, West Virginia will cease production by the end of March, though shipments will continue as long as inventories last. The move will remove 75,000 tonnes of tread capacity — the plant’s major grades were N120, N134, N339, and N351. At the time of the announcement, Waverly was Cabot’s only North American source for N120, N134, and N339, and one of only two sources for N351. Cabot reports that it has sufficient capacity at its remaining plants to pick up these grades and volumes elsewhere, though it didn’t publicly release details of where these grades were going.

Continental Carbon is scheduled to do a standard UTA (unit turnaround) for one of its units at Ponca City, Oklahoma, shutting the unit down for about ten days in April. (Rumors in the market had the entire plant shut down for April — not true.) Due to low inventories and ongoing production issues at the Phenix City plant, the project may lead to some short-term shortages for Continental customers.

US carbon black suppliers are hopeful that these moves will tighten the market. According to Notch estimates, the US carbon black industry is operating in the low 80s in terms of utilization, its weakest showing since the recession of 2001/2002. Margins are under tremendous pressure from high feedstock costs, and suppliers are facing a crush on working capital due to the contract lag (i.e., the time from when feedstock costs are incurred by the producer and when these higher costs can be passed on to the customer through price adjustments).

And pass-through remains an issue. Based on pricing estimates developed by Notch, it appears that carbon black price increases are not keeping pace with feedstock costs. In fact, average selling prices are below production costs, which means that at least some suppliers are losing money on every pound they sell. In short, the industry continues to chase oil, with little relief in sight. Clearly this situation cannot continue, and Notch expects that more capacity will be taken out of the US.

March 16, 2008

Situation in Nigeria

Filed under: Carbon Black — Notch @ 7:26 pm

An informative and provocative article about the ongoing problems at the Warri, Kaduna and Port Harcourt oil refineries operated by NNPC (Nigerian National Petroleum Corporation). The Warri refinery includes a carbon black unit with an estimated 18,000 tonnes per year of capacity. The unit has been operating sporadically in recent years and is currently believed to be shut down.

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