News from Notch Consulting, Inc.

August 16, 2010

EPA Requires US Carbon Black Producers to Report GHG Emissions

Filed under: Carbon Black — Notch @ 1:14 pm

The U.S. Environmental Protection Agency has issued new regulations that mandate greenhouse gas reporting in the U.S. carbon black industry. These regulations were the impetus for the development of a new ASTM International standard, ASTM D7633, Test Method for Carbon Black Carbon Content.

“Carbon black producers and contract laboratories will be the primary users of ASTM D7633,” says George Joyce, Manager, Materials Analysis Laboratory, Columbian Chemicals Co. Joyce says that the new standard may be adopted into U.S. and Canadian greenhouse gas regulations, and may also eventually be adopted by other national environmental agencies, including those of European Union countries that already have greenhouse gas reporting requirements.

“I anticipate global acceptance and utilization of ASTM D7633 since it is the only applicable testing standard available for carbon content of carbon black products,” says Joyce.

According to Joyce, ILS participants will need to have a carbon combustion analyzer in their laboratory. “Our current test method utilizes a combustion analyzer with infrared detection, but the committee will open participation to labs using all types of carbon combustion analyzers.”

In addition, Joyce notes that D24.66 is currently developing a proposed new standard, ASTM WK27667, Test Method for Carbon Content in Carbon Black Feedstock Oils. The proposed standard will be applicable to most commercial feedstock oils used to produce carbon black products in a furnace or thermal process.

Goodyear Ramps Up Danville as Truck Tire Demand Improves

Filed under: Carbon Black, insoluble sulfur, Tires — Notch @ 12:39 pm

From R&P News comes word that Goodyear is ramping up production at its Danville, Virginia tire plant by bringing back laid-off employees and returning to a continuous seven-day workweek. The plant cut back production in March 2009 from continuous operation to a normal schedule of three shifts five days per week. The increase is spurred by recovery in the aviation and commercial truck tire markets.

Why Did Michelin’s PAX Run-Flat Fail?

Filed under: Run-flats — Notch @ 11:54 am

Rita McGrath, blogging at Harvard Business Review, provides a short post-mortem on the failure of Michelin’s PAX run-flat tire system, which was discontinued in April 2008 after failing to catch on in the marketplace and prompting several class action lawsuits.

It turned out that to use the flat-run tires, the underbody of the cars had to be redesigned, and cash-squeezed auto makers proved reluctant to make the necessary investment. Also, replacing the tires required special equipment that most mechanic’s shops didn’t have and didn’t invest in. Say you had a flat-run tired and it failed, You’d have to go on a bit of a treasure-hunt to find someone who could replace it. Finally, if you did find a new PAX tire, it could cost upward of $1,200, about twice what customers expected to pay for a performance product.

Rita McGrath has written before on PAX, including this 2008 piece that includes many of the same points.

Earlier thoughts on the failure of PAX can be found here.

Buy Phillips Carbon Black: Choksey Securities

Filed under: Carbon Black — Notch @ 11:18 am

From the Economic Times, Deven Choksey, MD, an analyst with KR Choksey Securities, discusses his buy recommendation on Phillips Carbon Black.

For Phillips Carbon Black, the first comfort factor that we have in this company is that this is a company where you have got a huge amount of marginal safety.

It is just available at around 4 times odd to its future price earning multiple and having a carbon black capacity of about 3,60,000 tonnes and they are expanding it by about 1,15,000 tonnes additional and along with that, they have got about 60 megawatts power, which they are expanding by another 88 megawatts.

Now the power like in sugar industry is a by-product for them but if you look at the bottom line contribution in the last year, the power ended up contributing about more than 60% to the bottom line because the entire gas that is getting generated from the carbon black business is a feed stop for the production of power which is just about 60 paisa per unit cost vis-à-vis that they end up selling at about Rs 5 per unit kind of a thing out of which whatever they produce, 30% is captive and 70% is merchant sell.

All put together, this company is now moving probably into higher space with 157 to 160 crore profit in the current financial year and next year about 200 crore plus profit. So we find it much comfortable.

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