News from Notch Consulting, Inc.

April 29, 2009

Cabot Anounces Second Quarter Results

Filed under: Carbon Black, Silica — Notch @ 10:25 pm

Cabot Corporation announced its financial results for the second quarter of FY 2009 after the close of business today. For the quarter, Cabot reported net sales of $470 million and a net loss of $56 million (a loss of $0.90 per common share). Compared to the same period of fiscal 2008, Cabot’s Rubber Black volumes declined by 28% globally with decreases in all regions.  However, on a sequential quarter basis, volumes were flat with differing performance by region, with both North America and China showing sequential quarter volume growth of 12%. Volumes in South America were up 4%, while volumes in the Europe, Middle East, Africa region were up 1%. The worst performance was seen in Asia Pacific (excluding China), where volumes were down 22%. Rubber Blacks second quarter fiscal 2009 profitability decreased by $41 million when compared to the second quarter of fiscal 2008 driven principally by lower volumes from weak demand in the tire and automotive markets and lower unit margins from older, higher cost inventories.

The Performance Segment, which includes Performance Products (i.e., specialty blacks) as well as Fumed Metal Oxides, saw profitability decline by $33 million when compared to the second quarter of fiscal 2008, a result of lower volumes from weakness in the automotive, construction and electronics markets and lower unit margins from older, higher cost inventories.  When compared to the second quarter of fiscal 2008, volumes in Performance Products and Fumed Metal Oxides declined by 36% and 44%, respectively. As was the case in Rubber Blacks, however, Performance Product volumes grew by 10% on a sequential quarter basis, though Fumed Metal Oxides volumes were 18% lower due to substantial weakness in the electronics market.

Patrick Prevost, Cabot’s President and CEO, stated in a press release, “We have seen month to month improvements in our carbon black volumes since our December lows, although our results continue to be affected by the global weakness in the tire, automotive, and construction sectors.” He added that margins in the carbon black businesses were under pressure from higher cost inventories linked to slow volumes. Mr. Prevost also provided an update on the company’s restructuring efforts, announced last quater, stating, “On the cost side, our early efforts to respond to the economic downturn are bearing fruit, as we experienced a significant improvement in operating expenses. Separately, the restructuring we announced earlier in the year is proceeding as planned and we are on track to meet our objective of reducing fixed costs by at least $80 million on a fiscal 2010 run rate basis.

Cabot will hold its conference call discussing the results on Thursday, April 30, at 2:00 pm (ET).

April 28, 2009

Aditya Birla Nuvo Reports Results – Carbon Black Business Reports First Ever Loss but Production and Utilization are Up from Previous Quarter

Filed under: Carbon Black — Notch @ 5:26 pm

On Tuesday, Aditya Birla Nuvo Ltd. announced its results for the quarter and fiscal year ended March 31, 2009. The company posted a fourth-quarter consolidated net loss of Rs. 141.15 crore, compared with a net loss of Rs. 21.84 crore for the same quarter last year. The company’s loss per share for the most recent quarter widened to Rs. 15.11 from Rs. 2.52 in the prior year’s quarter. The company’s quarterly net revenue rose 11% to Rs. 4,096.91 crore from Rs. 3,683.34 crore in the year-ago quarter.

For the fiscal year ended March 31, 2009, Aditya Birla Nuvo reported a consolidated net loss of Rs. 430.52 crore, compared with a net profit of Rs. 150.78 crore for the fiscal year ended March 31, 2008. The company’s loss per share for the year totaled Rs. 45.73, down from a profit of 15.95 per share in the prior fiscal year. The company’s net revenue for the fiscal year rose 26% to Rs. 14,200 crore, compared to Rs. 11,250 crore for the last fiscal year.

The Carbon Black business reported consolidated revenue of Rs. 238.09 crore for the most recent quarter, down 11% from Rs. 267.07 crore in the year-ago quarter. However, annual revenues in the Carbon Black business rose 27% to Rs. 1095.64 crore for the fiscal year ended March 31, 2009, up from Rs. 863.84 crore for the previous fiscal year. The Carbon Black business reported its first ever quarterly loss of Rs. 13.75 crore (PBIT – Profit before Interest and Tax) for the most recent quarter, compared to a profit of Rs. 30.92 crore for the same quarter last year. The company cited severe fluctuations in crude oil prices during the quarter, as well as lower offtake from the tire industry in explaining the loss. However, the company reports that demand from the tire industry has shown improvement in the last quarter and losses have been curtailed. Aditya Birla Nuvo expects the Carbon Black business to regain profitability in the next quarter due to low crude oil prices.

Regarding its expansions, the company notes in a presentation accompanying the results that its greenfield expansion (at Patalganga) by 75 MTPA will occur by March 2010, and that “Project activities will be aligned to match commencement of production with the demand revival.”

Hi Tech Carbon saw carbon black production fall 24% in the most recent quarter to 45,182 tonnes, down from 59,783 tonnes in the same quarter last year. Capacity utilization fell to 78.6% for the most recent quarter compared to 104.0% in the same quarter last year. These declines were driven by a 19% drop in quarterly sales volumes, with volumes falling to 48,859 tonnes in the most recent quarter from 60,115 tonnes in the year-ago quarter.

HTC’s annual production also declined, falling to 202,076 tonnes for the fiscal year ending March 31, 2009 compared to 215,103 tonnes for the previous fiscal year. This caused a drop in capacity utilization to 87.9% for the most recent fiscal year compared to 102.4% for the previous fiscal year.

Despite the loss and the production declines, the Carbon Black unit’s Q4FY09 results do offer some very promising news for those watching for signs that the current downturn has reached its bottom.  In particular, carbon black production grew 17% from Q3 FY 2009 (ended December 31, 2008), rising from 38,589 tonnes in Q3 to 45,182 tonnes in Q4. Capacity utilization improved by a similar measure, rising from 67% in Q3 to 79% in Q4. Finally, carbon black sales volumes were up 33% in the most recent quarter, rising from 36,831 tonnes in Q3 to 48, 859 tonnes in Q4.

Here are the links:
Results
Press Release
Presentation

Phillips Carbon Black Commissions Cogen Unit at Durgapur

Filed under: Carbon Black — Notch @ 12:58 pm

Phillips Carbon Black announced that it commissioned a new 30 MW power plant at its carbon black plant in Durgapur, India on April 1, 2009.

As this blog reported (here and here), the unit was scheduled to come on-stream earlier this year, but startup was delayed by a technical snag.

County May Acquire Land of Former Carbon Black Plant

Filed under: Carbon Black — Notch @ 12:51 pm

From the Corpus Christi Caller Times comes news that Aransas County may acquire the land on which Evonik Degussa’s Aransas Pass carbon black plant is situated. The plant closed at the end of 2008. The parcel would include roughly 250 acres bordering State Highway 35 in Aransas Pass, Texas.

County commissioners scheduled a special meeting for Monday afternoon to consider purchasing, leasing or donation of the property. They also are considering hiring commercial real estate agent Jim Paxton to assist in the transaction.

Commissioners want to make sure the property bordering both sides of Business 35 between Aransas Pass and City by the Sea is devoted to clean uses. The plan, if the county acquires it, is to use the propertys prime waterfront location and deep water access to the Intracoastal to lure jobs to the tourism-reliant county.

The article notes that county officials are unsure if they will have to pay for the land, or if Degussa might donate the property to get tax breaks. The article also notes that the old plant may be cut up and used for scrap.

April 26, 2009

Raw Material Implications of Opelika Closure

Filed under: Carbon Black, General, Rubber Chemicals, Silica, Tire Cord, Tires — Tags: — Notch @ 10:06 pm

On April 13, Michelin North America announced that it would close its BFGoodrich Tire Manufacturing plant in Opelika, Alabama by October 31, 2009, citing an unprecedented drop in market demand.

The decision comes in the wake of the continuing economic crisis as consumers are driving fewer miles, purchasing fewer vehicles and delaying tire replacement purchases. The dramatic drop in market demand has created significant overcapacity in the North American tire markets that Michelin does not expect to rebound in the near term. According to the Rubber Manufacturers Association, North American tire sales volume is expected to decline for the second year in a row in 2009.

Opened in 1963, Opelika produces BFGoodrich and Uniroyal brand passenger car tires with a capacity of 25,000 units/day. It currently employs approximately 1,000 wage and salaried workers. Michelin plans to consolidate production at BFGoodrich tire plants in Tuscaloosa, Alabama and Fort Wayne, Indiana.

According to Rubber & Plastics News (subscription required), Michelin cut production at the Opelika plant beginning of February 14, laying off fewer than 80 manufacturing-related employees.

Notch estimates that the Opelika plant at full capacity consumed roughly 80 million pounds (36 KT) of elastomers per year, 45 million pounds (20 KT) of carbon black, 8 million pounds (3.6 KT) of textile reinforcement, and 3.5 million pounds (1.6 KT) of rubber chemicals including antioxidants, accelerators, and processing aids. Not all of this demand will be removed from the market, as some of Opelika’s production capacity will be consolidated at Tuscaloosa and Fort Wayne. Michelin has not publicly stated how much capacity will be permanently removed.

It is worth noting that the Opelika plant used a material handling system called Sealdbins for receiving and consuming carbon black in the plant. Originally developed by Uniroyal, Sealdbins are portable, collapsible rubber containers that are designed to minimize dusting and ease processing of dry powders and pellets. However, the system is outdated, and the bins apparently are no longer manufactured. Also, only a few carbon black plants in the US are still configured to deal with loading these containers.

____________________________________________________

Update: Since this post was published, I have heard more on some of these issues. Sealdbins were introduced in the 1950s and are similar to the fuel bladders widely used during the Vietnam war. Each one holds about 7,000 to 8,000 pounds of carbon black; they allow the carbon black to be shipped by flatbed truck. Onsite, the Sealdbins replace storage silos, which allows the plant to stock more grades without additional silos. This was important back in the 1960s, when plants were making both bias ply and radial tires, but less important today. People familiar with the system say that it worked well but just never caught on outside Uniroyal. I know of only one other tire plant in the US still using Sealdbins, but that plant has installed an on-site transfer station so that suppliers do not need to deal with the bins.

April 16, 2009

DC Chemical Files Lawsuit Against One Equity Partners Regarding Sale of Columbian Chemicals

Filed under: Carbon Black — Notch @ 10:30 pm

On March 23, 2009, DC Chemical filed a lawsuit in New York supreme court against One Equity Partners, L.P. (OEP) for breach of share acquisition related to the sale of DC Chemical’s interest in Columbian Chemicals Company to OEP. As noted on this blog yesterday, on April 1, 2009, DC Chemical changed its name to OCI Company, Ltd.

Here is a link to the case at WebCivil Supreme.

In the complaint, DC Chemical alleges that OEP violated the purchase agreement because it did not use “commercially reasonable best efforts” to cause the closing of the sale to occur.

DC Chemical states (i) it is ready for closing; (ii) the SPV [special purpose vehicle, an entity created to purchase the shares] is not ready for closing; and (iii) no MAE [materially adverse effect] has occurred that would justify non-performance by the SPV.

In its answer, the SPV, Columbian Chemicals (Cayman) Holdings, Ltd., denied the charges and asked the court to dismiss the case.

DC Chemical Changes Name to OCI

Filed under: Carbon Black, General — Notch @ 8:59 am

On April 1, 2009, Korean chemical company DC Chemical Co., Ltd. changed its name to OCI Company Ltd., part of a change in its corporate identity and strategic direction, particularly its increasing focus on polysilicon production. In January 2009, DC Chemical announced it was selling its two-thirds stake in Columbian Chemicals Company, though the company continues to produce carbon black through two Korean factories.

According to a company press release, the company’s new name “OCI” means “The Origin of Chemical Innovation,” and another purpose for the name change is to obviate any misperception regarding OCI’s core businesses that may have been caused by its previous name, which in Korean contained the words “steel” and “chemical.” Further, the goal is to eliminate any confusion that may have arisen due to the use of different corporate names domestically and abroad.

Here is the press release.

Oriental Chemical Industries was formed in 1959 and over the ensuing 50 years grew into a global producer of inorganic chemicals, coal chemicals, petrochemicals, fine chemicals, and most recently polysilicon. In 2001, OCI merged with Korea Steel Chemical and changed its name to DC Chemical.

Work Opportunities in Silica and Carbon Black

Filed under: Carbon Black, Silica — Notch @ 8:19 am

Conditions are definitely difficult in the rubber and tire industries right now, so I wanted to pass on two potential employment opportunities for individuals with the appropriate skill sets.

1. Precipitated silica engineering consultant needed

Agri Process Innovations is seeking an engineer with experience in precipitated silica production for periodic consulting work. Interested parties should contact Steve Danforth or Brian Mattingly.

Agri Process Innovations
PH: 870-673-3030
Email: bmattingly AT apinnovations.com (replace AT with @)
Web: http://www.apinnovations.com

2. Tire Recycler Seeks Personnel for Carbon Black Advisory Board

I posted this earlier in the month but wanted to repeat it.

McKinstry Reklaim is a Pacific Northwest company focused on reclaiming carbon black, oil, and steel from used tires through pyrolisis. The company’s first facility has been constructed in Boardman, OR, in cooperation with McKinstry Company and Harris Group. The plant became operational in late 2008.

The company is now interviewing individuals to join a Carbon Black Advisory Board. This group will provide industry insight, experience, and contacts to McKinstry Reklaim’s management team. Candidates should be seasoned professionals with strong experience in the following areas:

Marketing and Sales: Individuals with (a) extensive sales contacts in existing carbon black market places, (b) direct experience in developing marketing and pricing strategies, and (c) direct experience in developing sales accounts.

Product and Market Development: Individuals with extensive experience in developing carbon black products for specialty applications in inks, dyes, and pigments, and for use in rubber products. Candidates will advise the product development programs to be compatible with product properties and for enhancing product attributes.

Interested parties should contact Yaniv Gelnik
PH: 206-547-9557
Email: yanivg AT mckinstryreklaim.com (replace AT with @)

China’s First Quarter GDP Was Slowest Ever

Filed under: General — Notch @ 7:44 am

From Reuters comes the news that China’s economy slowed in the first quarter to its weakest pace on record. However, though an improvement in data for March offered tentative signs that the worst may be over for the world’s third-largest economy.

Annual economic growth slowed to 6.1 percent from 6.8 percent in the fourth quarter of 2008, slightly missing economists’ forecasts of a 6.3 percent rise and marking the weakest expansion since quarterly records began in 1992. Growth was dragged down largely by a sharp fall in exports, but a surge in lending in the first quarter spurred by the government’s 4 trillion yuan ($585 billion) stimulus package, helped cushion the blow.

Economists said there were no big surprises in the data, which confirmed a scenario of a gradual recovery in the latter part of the year, though they were divided over whether the government’s 8 percent growth target for this year was still attainable.

“Overall, the data shows that China had a very weak start to the year, offset by some stabilization in economic conditions in March as the impact of policy stimulus starts to build,” said Brian Jackson, economist at Royal Bank of Canada In Hong Kong.

“We think that the economy will remain subdued in the next few months but should start to improve gradually in the second half of 2009.”

April 10, 2009

Structural Changes in the Tire Industry

Filed under: Tires — Notch @ 2:28 pm

An interesting article from Jim Rippy, a former Conti SVP, on structural changes in the tire industry over the last decade or so.

An excerpt:

Tire sizes in the United States went from 13”, 14”, 15” rim diameters to 16”, 17”, 18”, 19”, 20”, 22”. Everybody wanted to get on the bandwagon and produce higher margin, higher value added products in their higher cost domestic operations. This was especially true in those operations carrying the high legacy cost associated with their age. It appears that we have reached 50% of all tires sold in the US imported from off/shore almost under the radar. Everyday we read about some distressed plant in the US and if we search, we will find an increase in production in China. I spent over 40 years in the tire industry and I still do not understand the shift to high-performance/ultra high-performance in a country with 55-70 mph speed limits. C’mon? Do we really need 125mph to 175mph tires? Another thought on this subject. How long before China is qualified to make more than bread and butter broadline production? How long? A lot of folks think that they will not be low wage forever. I agree, but it will take much longer than it takes them to pass the learning curve on producing large high-performance tires.

Older Posts »

Create a free website or blog at WordPress.com.