News from Notch Consulting, Inc.

February 28, 2011

Natural rubber production forecast to grow 4.8% in 2011

Filed under: General — Notch @ 6:57 am

The Association of Natural Rubber Producing Countries is forecasting that output of natural rubber from key producing countries will grow 4.8% to 9.77 million metric tons in 2011, according to its most recent monthly bulletin. ANRPC’s members account for 92% of global natural rubber production.

The forecast was lower than a growth target set by member governments of 8 percent with an estimated output of 10 million tons, assuming favorable weather conditions and a continuation of high prices this year, the association said.

Demand for natural rubber in China, India and Malaysia, which account for 48 percent of global usage, is expected to increase this year, the bulletin said. Demand in China, the largest user, may gain 9.1 percent to 3.6 million tons; India’s usage may gain 5 percent to 991,000 tons and consumption in Malaysia may rise 7 percent to 490,000 tons.

India’s ATMA charges dumping of tires by China, South Korea and requests duty-free imports of raw materials

Filed under: Carbon Black, Rubber Chemicals, Tire Cord, Tires — Notch @ 6:43 am

The Automotive Tyre Manufacturers Association (ATMA) of India has charged China and South Korea with dumping tires on the Indian market, according to Commodity Online. The association also has asked for duty-free imports of key raw materials, including synthetic rubber, tire cord, and rubber chemicals.

It is estimated that Chinese and South Korean rubber imports account for 70% of India’s tyre imports with various bilateral agreements nullifying the import duty of 10% and coming over with a basic customs duty tag of 8.6%, reported Financial Express.

With respect to imports of truck and bus tyres for 2009-10, the rate of imports has gone up by 35% for 2010-11, when calculated on annualized basis. Import of passenger car tyres has gone up by 40% for the same period.

Also, the industry has asked for duty-free imports of 2 lakh tons of natural rubber which is a projected deficit for 2011-12. As the Union Budget approaches, the association has also demanded duty-free imports of almost all raw materials like butyl rubber, styrene butadiene rubber (SBR), ethylene propylene non-conjugated diene rubber (EPDM), PBR, steel tyre cord, polyester tyre cord, nylon tyre cord and rubber chemicals.

In fact, cost of raw material is responsible for 70% of the production cost and about 62% of tyre industry turnover.

SRF expanding beyond nylon tire cord

Filed under: Tire Cord — Notch @ 6:30 am

Indian-based technical textile maker SRF Ltd. plans to invest Rs 665 crore on expansion projects, including a new plant in South Africa and another in Gujarat, according the Economic Times.

“While we are determined to expand operations in all our businesses to achieve and retain global leadership, the expansion in the chemicals and the packaging films businesses is part of our overall strategy and ongoing efforts to reduce our dependence on nylon tyre cord,” SRF MD Ashish Bharat Ram said.

The plant in South Africa will be dedicated to biaxially oriented polypropylene (BOPP), while the Bangladeshi plant will be dedicated to biaxially oriented polyethylene terephthalate (BOPET).

February 22, 2011

Rhodia boosting silica capacity in US, Europe

Filed under: Silica — Notch @ 1:44 pm

Rhodia (Lyon, France) has announced plans to increase capacity for highly dispersible silica production capacity at its plants in Chicago Heights, Illinois and Collonges-au-Mont-d’Or, France by 32,000 tons per year. Start ups are planned in the fourth quarter 2011 (US) and the first quarter 2012 (France).

These projects will supplement Rhodia’s recently inaugurated Qingdao (China) plant, which has a capacity of 72,000 tons per year. Combined, these three investments will increase Rhodia’s Highly Dispersible Silica capacity by over 40%.

“These expansions will ensure that globally we will be there for our customers to meet future demand for fuel efficient tires around the world,” commented Tom Benner, President of Rhodia Silica.

Here is the full press release.

February 21, 2011

EU to Establish Program to Check Compliance with Tire Regulations

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

According to Rubber & Plastics News (subscription required), the European Union plans to set up a market surveillance program to assess compliance with tire legislation. One task of the program will be to investigate levels of polycyclic-aromatic-hydrocarbon oils in tires made, sold and imported into the EU. High-PAH oils have been banned in tires in the region since January 2010, but early evidence suggests that some importers, notably from China, are not adhering to the law, the EU said.

Philippe Jean, head of the Automotive Industry Unit within the Directorate for Enterprise and Industry told an audience of tire professionals that the study would be the second in the EU, and be set up later this year.

The first such project would cover the motorcycle market in Italy where up to 30 percent of motorcycles and scooters are believed to be illegal, he said.

February 14, 2011

Goodyear Shutting Union City Plant by Year-end

Goodyear has announced that it intends to close its tire plant in Union City, Tennessee by the end of 2011 as part of a program to cut manufacturing costs globally. The plant employs 1,900 workers and has about 12 million units/year of capacity. This closure is the last component of a restructuring program that Goodyear initiated in 2009 that was aimed at cutting 15 million to 25 million units of high cost capacity. This action is expected to provide annual cost savings of approximately $80 million.

Here is the pertinent section of Goodyear’s latest earnings report:

Tennessee Plant Closure

Goodyear today announced plans to close its Union City, Tenn., tire manufacturing facility by the end of 2011 as part of its strategy to reduce high-cost manufacturing capacity globally and provide cost effective high-value-added products that the market is demanding while continuing to make high quality products for its customers.

“While we are committed to manufacturing in North America, all of our plants must be cost competitive and be able to demonstrate sustainable world-class productivity. That is not the case with this plant, and as a result, the market has moved beyond what the factory is able to build,” said Kramer.

This closure, when complete, will eliminate approximately 12 million units of available capacity and is the final action in plans announced in 2009 to eliminate 15 million to 25 million units of high-cost capacity globally. This action is expected to provide annual cost savings of approximately $80 million. The Union City plant currently employs approximately 1,900 associates.

Goodyear’s fourth quarter 2010 after-tax restructuring charge related to this action was approximately $160 million. Total after-tax restructuring, accelerated depreciation and asset write-off charges for this action are estimated to be approximately $270 million, of which approximately $140 million will be cash charges.

February 7, 2011

Evonik acquisition a “race between Asian players and private equity”

Filed under: Carbon Black — Notch @ 1:26 pm

CHEManager has a roundup of the current status of the Evonik acquisition. Evonik hopes to wrap up the deal by the end of the second quarter.

“It will be a race between Asian players and private equity,” an industry source said, adding that the business has vastly shifted to Asia in recent years.

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