News from Notch Consulting, Inc.

January 31, 2011

Phillips Carbon Black pursuing Evonik acquisition

Filed under: Carbon Black — Notch @ 6:19 pm

On Monday, Sify Finance reported that RPG’s group chairman had confirmed to reporters that Phillips Carbon Black Ltd. was pursuing its bid to acquire Germany-based Evonik Carbon Black, the world’s second largest carbon black maker.

“Is it an opportunity (Evonik acquisition) that you should let go off?” RPG group chairman Sanjiv Goenka said while talking to reporters here Monday.

As reported here last week, Evonik has short-listed a group of around six bidders for the second round of bidding, which is expected to commence next month. This group includes buyout firms including Advent International, Triton Partners and Rhone Capital, as well as strategic buyers including Phillips Carbon Black Ltd., Aditya Birla Group, and Cabot Corporation.

On Monday, January 31, Birla Group announced that it had entered into a definitive agreement to acquire Columbian Chemicals for $875 million.

Kumar Mangalam Birla’s diversified conglomerate pipped rival bids, including one by the Kolkata-based PCBL, to acquire Columbian Chemicals.

Birla Group announces acquisition of Columbian Chemicals

Filed under: Carbon Black — Notch @ 3:13 pm

The Aditya Birla Group announced today that it had entered into a definitive agreement to acquire Columbian Chemicals Company from One Equity Partners, a unit of JP Morgan Chase. The acquisition is being carried out through Birla’s subsidiaries Alexandria Carbon Black, Thai Carbon Black, and SKI Investment.

The press release did not include details of the transaction, but Money Control put the price at $875 million, on a zero debt basis. The deal is expected to be completed by mid-2011.

While addressing the press, Aditya Birla Group chairman Kumar Mangalam Birla said the group hoped to complete the deal by mid-2011. This transaction has been done by privately held companies of the Aditya Birla group. Birla pointed out that the transaction will be done through three of the companies. One is Alexandria which is an Egypt-based company for the AV Birla Group there which has some operation in the Egyptian market as far as Carbon Black is concerned. Then you have the Thai Carbon and then SKI Investment, a holding company in the Aditya Birla Group. The total transaction value, as he said, is USD 875 million and will be on a zero debt basis.

The transaction will make the new Birla/Columbian the largest carbon black producer in the world, with 1.98 million tonnes/year of capacity, compared to 1.91 million tonnes/year for Cabot and 1.36 million tonnes/year for Evonik Carbon Black.

Here is the press release.

Hankook introducing green tire in US

Filed under: General — Notch @ 7:24 am

From Tire Business (subscription required) comes word that Hankook Tire America Corp. will roll out three new tires this year, including a low rolling-resistance tire for hybrid and other fuel-efficient vehicles. The tire is called the enfren eco and uses a high-silica-content synthetic rubber tread compound for reduced rolling resistance, according to Hankook, though it did not release specific rolling-resistance data for the tire. The enfren eco will be available in the US one 16- and four 15-inch sizes. The eco efren was introduced in South Korea in 2008, in Japan and Australia in 2009, and in China in 2010. Hankook Tire America’s other two new consumer products are the Dynapro HT all-season performance tire for light trucks, vans and SUVs, and the Optimo H426 all-season grand touring performance tire.

US & California agree on new fuel economy standards

Filed under: General, Tires — Notch @ 7:00 am

From USA Today:

The Obama administration and the state of California announced a deal today to propose their new fuel-economy standards for 2017-25 cars and trucks at the same time — by the first of September.

The EPA had planned to do so by the end of September, California had threatened to go its on way and propose its own standards by March 1.

Automakers — who supported the current deal for a single national standard of 35.5 mpg by 2016 that was accepted by California — had feared a patchwork of standards after that time set by various states. That would complicate and add to the costs of vehicle planning.

The final standards are expected to be set in 2012.

January 30, 2011

Brent/WTI price spread hits record high

Filed under: General, Uncategorized — Notch @ 10:22 pm

Sam Fletcher at the Oil & Gas Journal highlights the record price spread between front-month benchmark US light, sweet crudes and North Brent oil, which widened to a record $11.75/bbl on Jan. 27 and prompted speculation that the higher priced Brent should replace West Texas Intermediate as the market’s usually quoted benchmark.

Energy prices reversed again in the New York market, giving back much of the gains from the previous session, due to weak economic data and talk that the Organization of Petroleum Exporting Countries may increase production.

Fletcher has much more on factors affecting the spread here.

At The Barrel, John Kingston has more on this development in a post entitled “Oil traders watch Brent/WTI with dropping jaws.”

If the NYMEX light sweet crude oil contract is dying, and is irrelevant because its Cushing delivery point is drowning in oil that can’t move to the US Gulf refining centers, it has a strange way of showing it. Open interest at this point is slightly more than it was at the beginning of 2010.

But that doesn’t cover up the bewilderment that the oil industry is expressing at the Brent/WTI spread, which on Wednesday climbed above $11 before falling back slightly. Still, Brent was a little more than $2 over WTI in early December, and now it’s double digits. This is a relationship that for years, when Brent exceeded WTI, it was newsworthy. Now the only thing newsworthy about it is the double-digit size of Brent’s premium to the Cushing-based barrel.

January 25, 2011

Evonik Industries short lists potential buyers

Filed under: Carbon Black — Notch @ 1:17 pm

According to Dow Jones Newswires, Evonik Industries has short listed around half a dozen bidders to move to the second round of the auction of its carbon black business.

Buyout firms through to the second round are likely to include Advent International, Triton Partners and Rhone Capital, the people said. Likely strategic buyers include Phillips Carbon Black Ltd., part of Indian conglomerate RPG Group, U.S. Columbian Chemicals, which is owned by Equity One Partners and India’s Aditya Birla Group which is currently in talks to Buy Columbian Chemicals. U.S. Cabot Corp (CBT) which competes in the sector may also be interested.

January 24, 2011

Yokohama expects commercial tire supplies to remain tight in 2011

After a very sharp downturn that began around mid-2008 and deepened during the downturn in 2009, the commercial truck tire industry recovered strongly in 2010. Yokohama’s website has an interview with its own Dan King on the situation in 2010 and the prospects for 2011. A few excerpts below. The whole interview is here.

Question: Despite the tough economic climate, the commercial tire industry weathered the storm, and for Yokohama, business actually increased. What were some of the factors that helped the company report positive numbers in 2010?

King: Simply put, demand increased. In 2009, there was a huge reduction in inventory levels almost across the board, including the tire industry, and the retail and consumer packaged goods. Fleets, for example, went so far as cannibalizing tires from their other trucks that were not in operation. Because of the recession, there was a lot of risk to carry inventory.

However, in 2010, the economy began to turn around and trucks started to get back on the road. It was this pent up demand that primarily contributed to a very successful year for Yokohama.

Question: Do more trucks carrying goods translate to more commercial tire sales?

King: Yes, actual vehicles on the road, miles being driven and freight being hauled are very good indicators of commercial tire sales and where the economy is going. All of those show signs of improvement and that we’re heading in a positive direction.

Question: From a pure industry perspective, how would you describe the 2010 commercial market?

King: 2010 was definitely much better than 2009, but it also came with its challenges. The biggest issue for Yokohama and the industry was fill rate. It started really in the middle of the year, and it’s been very difficult for us to reach our increasing demand. Yokohama had huge increases in demand – actually higher than the industry’s – and it’s been difficult for us to supply to that demand.

Question: Is Yokohama increasing manufacturing and/or using more of the global supply and putting it in the U.S. market?

King: Both, we will allocate more production from Japan and will be expanding production at other plants.

Question: The spiraling cost of raw materials has to also be on the list of 2011 concerns…

King: Unfortunately, we do not see it letting up, especially through 2011. We’ve had to announce a price increase that started in January. Unfortunately for us, it’s not as high as what we’re experiencing in cost increases, so we can’t pass on everything. We’re willing to absorb that for right now, but we do believe raw materials will continue to escalate through 2011.

January 23, 2011

Aditya Birla Group makes bids for both Evonik and Columbian

Filed under: Carbon Black — Notch @ 10:40 pm

According to the Economic Times of India, Mumbai-based Aditya Birla Group has submitted bids for both German-based Evonik Carbon Black and US-based Columbian Chemicals but will buy only one. The article indicates that Birla bid $700 million (approximately Rs 3,200 crore) for Evonik and $800 million (Rs 3,665 crore) for Columbian. The situation should be resolved within the next few weeks.

On Friday, several sources reported that Birla had made a bid for Columbian Chemicals. From the Wall Street Journal online:

Aditya Birla Talking Deals

Diversified Indian conglomerate Aditya Birla Group is in talks to buy U.S.-based carbon black manufacturer Columbian Chemicals Co., people familiar with the matter said.

Aditya Birla would pay $800 million in cash, the people said, without elaborating on whether there is a noncash component to the deal as well. The two companies “are in exclusive talks, and the deal is likely to close in the next two weeks,” said one person.

The article also lists India’s Phillips Carbon Black as a possible buyer for Evonik Carbon Black.

An article in the Business Standard put the purchase price at $900 million.

AV Birla set to buy US firm for $900 mn

The Aditya Birla Group is set to acquire US carbon black manufacturer Columbian Chemicals in a deal that could close as early as next week. Negotiations are at the last stages with deal size expected to be around $900 million (Rs 4,100 crore). Aditya Birla Group is also in talks with several banks to tie up acquisition funds including Deutsche Bank, Royal Bank of Scotland and other foreign banks. JP Morgan is advisor to the deal.

January 14, 2011

New carbon black plant announced for Abu Dhabi

Filed under: Carbon Black — Notch @ 11:12 am

From Zawya Projects comes news that Abu Dhabi Oil Refining Company (Takreer) plans to build a carbon black plant at its Ruwais Refining complex in Abu Dhabi, UAE. The project will also include the construction of a coker unit and hydrogen processing facilities. In December 2010, the FEED contract was awarded to Bechtel. The project is scheduled to be completed in 2013. The announcement does not include capacity figures for the coker unit or carbon black plant.

January 12, 2011

Evonik Carbon Black raises prices for carbon black pigment grades

Filed under: Carbon Black — Notch @ 11:26 pm

Evonik Carbon Black announced today that it was raising prices for carbon black pigment grades and pigment black preparations by up to 10 % for deliveries to locations in Europe, Asia and RoW (rest of world). The price increase will be effective for all deliveries on or after February 15, 2011. Evonik Carbon Black GmbH is one of the world’s largest producer of carbon black (furnace carbon black, lamp black, gas black and thermal black).

Here is the press release in English.

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