News from Notch Consulting, Inc.

June 29, 2009

Birla Seeks to Double Revenues

Filed under: Carbon Black — Notch @ 6:36 am

India’s Business Standard reports that the Aditya Birla Group is aiming to double its revenue to $60 billion in the next five years by expanding its presence abroad. The expansion will be based in part on acquisitions in emerging regions with ‘good growth trajectory,’ including East Europe, South America, South East Asia, and China.

“The downturn has given opportunity for consolidation and growth in new markets; so in the next 12 to 24 months we plan to establish our globalisation trajectory,” said Dev Bhattacharya, group executive president, corporate strategy and business development, at Aditya Birla Management Corporation.

June 23, 2009

Settlement Proposed in Concarb Ponca City Class Action Suit

Filed under: Carbon Black — Notch @ 6:45 am

Native American Times is reporting that a settlement has been proposed in the Class Action lawsuit filed by the Ponca Tribe against Continental Carbon regarding the Ponca City carbon black plant.

A settlement has been proposed in the Class Action lawsuit, Ponca Tribe of Indians, et al. v. Continental Carbon Company, et al., Case No. 05-445 (W.D. Okla.) (Judge Cauthron Presiding). The settlement will provide $10,500,000.00 to settle claims of Enrolled Tribal Members who own land or a mortgage interest within the boundaries set out in the map below on January 3, 2007. If you qualify, you may send in a claim form to get benefits, or you can exclude yourself or object to the settlement.

The settlement is subject to approval from the United States District Court for the Western District of Oklahoma.

June 18, 2009

ITC Rules that Chinese Tire Imports Have Harmed US Industry

Filed under: Carbon Black, General, insoluble sulfur, Rubber Chemicals, Silica, Tires — Notch @ 1:22 pm

According to Reuters, the US International Trade Commission announced on Thursday, June 18, that China was unfairly flooding the U.S. market with tires. In a 4-2 vote, the International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets. Later this month, it will recommend a remedy to President Barack Obama.

The petition was filed by the United Steelworkers in response to a dramatic increase in imports of Chinese tires in recent years. It would limit imports of automobile tires from China to 21 million, the level in 2005. This is roughly half the current level. In a statement responding to the ruling, USW International President Leo W. Gerard said, “Our domestic industries cannot survive unless our government enforces the trade laws that are designed to curb and dissuade anti-competitive practices that cause market disruptions. We anticipate that the remedies that will be delivered to President Obama will allow the time necessary to rebuild the U.S. tire industry.”

Yesterday, the Tire Industry Association came out in opposition to the petition. “TIA would ask the ITC to continue to support a free-trade policy, and reject the USW’s effort to impose a protectionist policy,” the group said in a press release.

June 17, 2009

Michelin’s May Tire Data Show Declines in all Markets Outside China

Filed under: Carbon Black, General, insoluble sulfur, Rubber Chemicals, Tires — Notch @ 1:22 pm

Michelin has released its May 2009 and year-to-date figures for tire sales, revealing continued steep declines in the tire markets of North America, Europe, Brazil, and Japan. The Chinese market remains an exception, with both passenger and truck tires sales generally up.

In original equipment passenger car and light truck tire markets, European sales were down 28.2% in May (relative to May 2008), while North American sales were down 52.4%, and Chinese sales were down 9.6%. In replacement PC/LT tires, European sales were down 15.1% in May, North American sales were down 9.8%, and Chinese sales were up 2.0%.

In original equipment radial truck tires, very steep declines were registered in May in Europe (-72.9%, compared to May 2008), North America (-53.5%), Brazil (-24.1%), and Japan (-65.2%), while China saw growth of 2.6%. Replacement radial truck tire sales for May were also down nearly across the board, including Europe (-23.3%), North America (-12.8%), Brazil (-22.3%), and Japan (-17.4%), while China saw essentially flat growth of 0.1%.

Again, with the exception of China, year-to-date figures were down across the board. In China, PC/LT tires saw double digit YTD growth (January through May) in both OEM and replacement markets. Chinese truck tire markets saw weaker YTD growth, with OEM sales up 1.3% but replacement sales down 1.0%.

Details are here.

June 9, 2009

Notch Publishes New Report on Insoluble Sulfur

Filed under: General, insoluble sulfur — Notch @ 10:23 am

Notch Consulting Group has just published a new report covering the global market for insoluble sulfur, a non-blooming vulcanizing agent used in rubber compounding, mainly in components requiring a high degree of stickiness or tack, including radial tires, belting, and hoses.

This 45-page report provides global demand figures for the insoluble sulfur market, including data for all regions and 15 leading countries. Data are provided for all years from 2005 through 2008, with forecasts for 2009, 2010, and 2015. Demand is detailed by major market, including passenger tires, truck tires, other tires, and non-tire rubber goods. The report also provides market share and capacity by supplier, current pricing, and profiles of leading suppliers.

With its prospects tied inextricably to the motor vehicle and tire industries, the insoluble sulfur industry currently faces its most challenging conditions in 25 years. World Markets for Insoluble Sulfur chronicles the industry’s current condition in detail, and provides forecasts for short term recovery as well as long term growth.

Here is an overview of the report (PDF), including the full table of contents.

Contact Notch Consulting Group at info AT notchconsulting.com with questions or to order the report.

June 8, 2009

How Many New Cars Does the US Need?

Filed under: Carbon Black, General, Rubber Chemicals, Silica, Tire Cord, Tires — Notch @ 4:09 pm

The New York Times recently had an article that asked one of the key questions regarding the future of the US and global motor vehicle industries: how many new cars does the United States really need?

Automakers, along with the thousands of companies that supply them with parts and components, have become accustomed to a US market that supports light vehicle sales in the range of 17 million vehicles per year. But many of those purchases were based on home equity loans, easy credit, and lease agreements that put drivers into new cars every few years. The current economic downturn has pushed that number to below 10 million vehicles per year (9.3 million on an annualized basis as of April 2009, according to Autodata Incorporated).

The question, then, is what will the US auto market look like once the recession ends? Following the housing collapse, the credit crunch, and the oil shock of 2008, has there been a fundamental shift in vehicle ownership levels in the United States?

According to the New York Times,

The Treasury Department’s advisers, who initially expected auto sales to pick up late next year, now foresee no jump in demand this year or in 2010. And even five years out, they expect annual sales to be about 15 million, still well below the peaks of this decade.

The United States already has by far the highest per capita vehicle utilization rates in the world, an average of 2.28 vehicles per household.

Over at Reuters, Felix Salmon has grappled with these same issues (here and here) and has linked to several charts showing new car sales per capita. Here is a chart logging annualized vehicle sales in the United States from January 1994 through January 2008. Based on Bureau of Transportation Statistics data, it shows annualized vehicle sales, sales per 1,000 population, and registered vehicles per 100 population. Here is the same chart covering the period from January 1976 through January 2008.

As the charts demonstrate, there has been steady growth in the number of registered vehicles per 1,000 population over the last several decades. At the same time, the US auto market has dropped from selling about 60 cars per 1,000 population during peak years down to about 35 in recent months.

Felix Salmon concludes from this data:

If we’ve learned anything over the past decade, it’s that things can stay at unsustainable levels for much longer than anybody might imagine. And over the medium term, it’s far from obvious that auto sales in the 9-10 million range are really as unsustainable as all that. Not only don’t we need to get back to “a typical replacement rate”; it’s actually very unlikely we will ever again see the rates of car ownership that prevailed before the crash. That was a world of 3-car garages in exurban McMansions; we’re moving into a more sustainable way of living, which involves fewer cars and higher urban density. Those black squares in the graph above are going to start marching downwards for many years to come. Which means that the wiggly lines aren’t ever going to regain their prior peaks.

A few comments of my own. First, I’m dubious that Americans have moved en masse toward a more ‘sustainable way of living,’ but I do think that Americans will buy fewer new cars and own them longer. A big part of this shift is related to the quality push among automakers over the last 25 years: there’s absolutely no reason consumers shouldn’t be able to hold onto their vehicles for 10 years or longer if they wish. Also, the shift in the US vehicle product mix toward smaller, more fuel-efficient vehicles, which was given a hard push by last year’s record-high gas prices, seems likely to continue given the Obama Administration’s proposals for tighter CAFE standards. That is not to say that I foresee SUVs disappearing any time soon, just that the trend toward ever larger vehicles (and the accompanying trend toward larger tires) seems to have peaked.

My second observation is that the new data provide confirmation, if any were needed, that the growth over the next few decades will come in developing countries. While on a tour in southern China last year, I drove for miles and miles on a new eight-lane highway that was eerily devoid of traffic (it was just completing construction). I suspect it will not be free of traffic for long. For emerging countries such as China and India to approach vehicle utilization rates that are even a quarter of those in most developed economies will require millions of new vehicles.

June 4, 2009

Hankook Tire Introduces Fuel Efficient Tire Line in Australia

Filed under: General, Silica, Tires — Notch @ 11:30 pm

Hankook Tire has launched its enfren line of low rolling-resistance tires to the Australian market, the first market outside Korea to receive the new enfren technology The local release of the Hankook enfren tire range reiterates the growing importance of the Australian market to Hankook Tire.

Developed under Hankook’s new Kontrol Technology program, the efren range of low rolling-resistance tires combines a number of technologies to help improve fuel economy by as much as five per cent, resulting in a reduction of CO2 emissions.

Tire Companies Among GM’s Largest Creditors

Filed under: General, Tires — Notch @ 1:06 pm

Tire Business is reporting (subscription required) that tire companies Continental A.G., Goodyear and Bridgestone Corp. are among General Motors Corp.’s 50 largest creditors. The three companies are collectively owed nearly $27 million, according to court documents. GM filed for Chapter 11 bankruptcy protection June 1, showing $172.8 billion in debts and $82.3 billion in assets.

Phillips Carbon Black Defers Vietnam Project

Filed under: Carbon Black — Notch @ 12:30 pm

According to an article at DNA, an Indian news site, Phillips Carbon Black has decided to defer a project to build a 55,000 tonnes per year carbon black plant along with a 16 megawatt power plant in Vietnam. The $46 million project is a joint venture between Phillips Carbon Black and Vietnam National Chemical Corporation (Vinachem). According to the article, the project was put on hold because of the economic slowdown.

The blog has previously reported on the Vietnam plant here, here, and here.

Under the original schedule, the plant would have come on-stream around mid-2010. It would be PCBL’s first carbon black plant outside India.

According to sources, the site for the Vietnam project has been identified and a token amount for land remitted.

Sources said that the final payment is to be released after financial closure, but this has been deferred until the global liquidity scenario looks up. However, the environment impact assessment study (EIA) has commenced, and commercial production is expected to start within 18 months of the financial closure.

PCBL’s new greenfield carbon black project at Mundra, India is proceeding on schedule, and is due on-stream during the second quarter of FY 2009/10 (i.e., third quarter 2009). The project includes a 90 KTPY carbon black plant and a 16 MW cogen plant. The structural and civil work on the project has been completed.

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