News from Notch Consulting, Inc.

May 12, 2008

Phillips Carbon Black Raising Prices

Filed under: Carbon Black — Notch @ 8:40 pm

According to Reuters India, Phillips Carbon Black intends to increase carbon black prices by 15 percent due to higher crude oil prices.

“The dialogue is already on with our main consumers, which is the tyre industry,” [PCBL] Chairman Sanjiv Goenka told Reuters on Friday.

PCBL Signs Agreement for Carbon Black Plant in Vietnam

Filed under: Carbon Black — Notch @ 8:34 pm

According to several Vietnamese sources, Phillip Carbon Black signed an agreement on May 9 with three Vietnamese companies to build Vietnam’s first carbon black plant. The three Vietnamese partners in the venture are the Southern Industrial Rubber Joint Stock Company, the Da Nang Rubber Joint Stock Company, and the Golden Star Rubber Company, all of which are subsidiaries of Vinachem (the Vietnam National Chemical Corporation.

According to a short article on VietnamNet,

The plant will be built in southern Ba Ria-Vung Tau province at the cost of US$65 million, of which 22 percent will be contributed by the three domestic companies. The plant is expected to produce around 110,000 tonnes annually with half the output for export.

According to an article on Thanhniennews.com, exports will be concentrated in Japan and Korea. Start up is scheduled for 2009.

Both articles quote the same figures for the amount of carbon black that Vietnam imports every year: putting the total at about 50,000 tonnes valued at $60 million ($1,200 per tonne), with the main importers listed as India, Korea and the US.

According to reported trade statistics, Vietnam imported 19,851 tonnes of carbon black valued at $19 million in 2005 (the latest year for which import data are available). If one looks at export data (i.e., the amount of carbon black that trading partners reportedly exported to Vietnam), in 2006, Vietnam imported about 26,950 tonnes of carbon black from 16 countries, with the leading suppliers being China (7,396 tonnes), Korea (7,132 tonnes), India (4,654 tonnes), Thailand (3,516 tonnes), Malaysia (1,759 tonnes), Indonesia (1,427 tonnes), and Iran (550 tonnes).

According to Tire Industry Investment 2008, Yokohama Rubber opened a new tire plant in Ho Chi Minh City in 2007, while Kumho Tires inaugurated a new tire plant in Ho Chi Minh City in March 2008. These new plants are expanding the domestic market for carbon black in Vietnam as they ramp up to full capacity.

Gazprom’s On-Going Saga

Filed under: Carbon Black, General — Notch @ 3:23 pm

An interesting article from the New York Times on Gazprom’s recent activities. Last week, Dmitri A. Medvedev, Gazprom’s current chairman, was sworn in as Russia’s president. He succeeds Vladimir Putin, who will become prime minister. The current prime minister, Vickor A. Zubkov, is expected to replace Mr. Medvedev as chairman of Gazprom at the company’s annual shareholders meeting in June.

As the article illustrates, Mr. Putin used his tenure as Russia’s president to reassert the government’s direct control over Russia’s vast energy resources. Reflecting this consolidation, Gazprom now ranks as the world’s third-largest company by market value, and may surpass ExxonMobil to become the largest publicly traded company by 2014.

One interesting piece of information in the article is related to the domestic price of natural gas for Russian consumers:

Gazprom’s ties to the government are already paying dividends in the domestic market. Under a policy championed by Mr. Medvedev when he served as deputy prime minister, Russian consumers are going to have to pay starkly higher prices for natural gas. Prices are set to rise about 25 percent a year, starting this year, with the goal of reaching parity with world energy prices by 2011.

Policies like this mean that average Russians won’t continue enjoying their traditional access to cheap energy, and they offer a stark example of the government’s willingness to give Gazprom a leg up — regardless of the social fallout.

This policy has implications for many industrial sectors, but particularly carbon black, where producers will be paying more for natural gas.

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