News from Notch Consulting, Inc.

May 30, 2013

Orion Engineered Carbons reports first quarter results — double-digit growth in Brazil can’t offset lingering weakness in Europe and North America

Filed under: Carbon Black — Notch @ 12:26 am

On May 29, Orion Engineered Carbon released its results for the first quarter 2013 (ended March 31, 2013), reporting revenues of €341.1 million for the quarter, down four percent from €355.4 million in the same quarter of 2012. Operating results (EBIT) totaled €25.05 million in the first quarter of 2013, down 11% from €28.16 million in the same quarter of 2012. For the first quarter of 2013, revenue of €341.1 million consisted of €243.2 million in rubber grades (71% of total sales) and €97.9 million in pigment grades (29% of total sales). All of the sales decline against 1Q 2012 was recorded in the rubber segment as sales of rubber grades fell 5.8% compared to 1Q 2012, while sales of pigment grades in the most recent quarter rose slightly compared to 1Q 2012.

Management cited an unexpectedly slow start to 2013 for Rubber in the US and Europe, partly offset by increased demand in South Africa and South America. Overall demand for Pigment remained stable compared to same quarter of prior year. Lower demand in the US was offset by increased demand mainly in Europe as well as in other regions.

Regional results for the areas served by Orion were as follows (all figures are for 1Q 2013 revenues relative to 1Q 2012):
Europe: -7.7%
North America: -4.7%
South Korea: -5.6%
South Africa: +4.1%
Brazil: +23.2%
Other regions: +6.5%

May 23, 2013

Solvay breaks ground on new silica plant in Poland

Filed under: Silica — Notch @ 11:46 pm

On May 22, Solvay held a ground-breaking ceremony for its new plant for highly dispersible silica in Wloclawek, Poland. The plant represents a €75-million investment that will create more than 50 new jobs and expand the company’s HDS capacity by 85,000 tons per year. The plant is expected on-stream in 3Q 2014.

Located in central Poland, close to key energy distribution and the recently completed Warsaw-Gdansk highway, the new facility is located on a plot of 8 hectares and will be used to supply customers in Eastern Europe and Russia. The site is designated as a special economic zone (SEZ) and will be integrated within the industrial complex of Anwil, a subsidiary of the Polish refining and energy company PKN Orlen Capital Group, one of Central Europe’s largest refiners of crude oil.

May 20, 2013

Michelin, Pirelli tire data for April suggest some recovery in Europe, strong growth in SA, mixed results in NA

Filed under: Carbon Black, Rubber Chemicals, Silica, Tires — Notch @ 12:11 pm

Last Thursday, both Michelin and Pirelli released their monthly tire sales figures for April, and the data are consistent in several notable trends.

Europe: While YTD figures for Europe remain negative, both Michelin and Pirelli data show volume gains in Europe for April 2013 relative to April 2012. Michelin data have passenger and light truck demand up by 3% in OE and 5% in replacement, while heavy truck tire demand was up 9% in OE and 14% in replacement in April 2013 (yoy to April 2012). Pirelli figures have European car and light truck tire demand up 2% for OE and 8% for replacement, while truck tire demand in Europe was up 9% in OE and 14% in replacement in April 2013 (yoy to April 2012).

South America: Another trend common to both the Michelin and Pirelli data is very strong demand in South America. Michelin data cover only Brazil and show demand for passenger car and light truck tire demand up 28% in OE and up 21% in replacement, while heavy truck tire demand was up 16% in OE and 10% in replacement in April 2013 (yoy to April 2012). Pirelli figures cover the Mercosur region and show car and light truck tire demand up 30% in OE and 19% in replacement, while truck tire demand in Mercosur was up 53% in OE and 10% in April 2013 (yoy to April 2012).

North America: Results for both companies in North America were mixed. Michelin data for North America show passenger and light truck tire demand up 14% in OE and down 3% in replacement, while heavy truck tire demand was down 13% in OE and up 1% in replacement in April 2013 (yoy to April 2012). Pirelli data show NAFTA car and light truck tire demand up 14% in OE and down 4% in replacement, while NAFTA truck tire demand was down 7% in OE and up 7% in replacement in April 2013 compared to April 2012.

Here is the Michelin data.

Here is the Pirelli data.

May 16, 2013

Asia Carbon Industries adding power plant, upgrading carbon black capacity to specialty grades

Filed under: Carbon Black — Notch @ 9:32 pm

On May 15, Asia Carbon Industries announced results for the quarter ended March 31, 2013. Net sales for the quarter totaled $5,963,945, down 53% from the same quarter of 2012. Income for the quarter was $389,953, down 78% from the same quarter of 2012. This sharp drop in sales and income were attributable to a major conversion project that the company is carrying out on three of its four production lines, which are being upgraded to produce specialty grades of carbon black, which is expected to be completed in 3Q 2013. This project was explained in detail in the company’s previous quarterly results announcement:

In the fourth quarter of 2012, the Company began converting its three dry production lines to special carbon black (“SCB”) production lines. SCB has a broader range of use compared to the more traditional products including use as a pigmenting agent, UV stabilizer or conductive agent in a variety of products, such as plastics, toners and printing ink and coating, battery and electrical parts. Management believes SCB will generate more revenues as a result of higher sales prices. The conversion affected the Company’s operating results of 2012 since the three dry production lines ceased operations during the fourth quarter. The cost of the project is estimated at $4 million and will be funded by the cash from the Company’s operations.

In addition to the product upgrades, in June 2012, Asia Carbon Industries began construction on a 3000 KW power plant that uses residual exhaust gas generated by carbon black manufacturing. The new power plant is expected to satisfy the company’s electricity needs for its current production lines. The cost of the construction of the plant is $6.4 million, and also was funded with cash from operations. In March 2013, the company reported that the new power plant was complete and in its testing phase.

The company’s current product line consists of two hard grades (N220 and N330) and one soft grade (N660) as well as naphthalene oil, a by-product of its production process.

May 14, 2013

Evonik announces new silica plant in Brazil

Filed under: Silica — Notch @ 10:52 am

On May 10, 2013, Evonik Industries announced plans to build a new precipitated silica plant in Americana, Brazil by the end of 2015. The cost of the plant is in the “middle double-digit million-euro range,” according to Evonik. The plant’s capacity was not released, though the new plant is part of a larger expansion plant that will raise Evonik’s total silica capacity by 30% from 2010 levels. Evonik Industries has started basic engineering for the plant, which is subject to the approval of the responsible bodies. The plant will be Evonik’s first slica plant in South America. Evonik’s silica is marketed under the ULTRASIL® brand name for energy-saving tires with low rolling resistance while SIPERNAT® grades are used in the feed and food industry as well as the paints and coatings industry.

According to Evonik, in South America, and in Brazil in particular, demand for precipitated silica is rising due to significant growth of the local automotive industry, on the one hand, and a rising demand in the area of life-science and in agriculture, on the other, for example as a dosing aid for animal feed. “In our expansion course, we aim to accompany the growth of our global key customers, particularly in the tire industry,” says Dr. Thomas Haeberle, member of the Evonik Executive Board and responsible for the company’s Resource Efficiency Segment. Evonik expects additional demand due to a planned labeling obligation for fuel-saving tires in Brazil.

Here is the full press release.

May 13, 2013

Transportation Weight Loss Diet Conference coming next month

Filed under: Conferences, General — Notch @ 11:00 am

UKIP’s Transportation Weight Loss Diet Conference will be held next month in Stuttgart. The two-day conference focuses on reducing vehicle weight and decreasing carbon footprints in transportation equipment, including the aerospace, automotive, and rail sectors. The conference will be held in Stuttgart, Germany on June 5-6, 2013. Details are here.

ICIS announces second butadiene conference

Filed under: Conferences, General — Notch @ 10:52 am

ICIS, a chemical consulting firm, has announced the 2nd ICIS Butadiene and Derivatives Conference, a two-day conference focussing on the butadiene value chain, from feedstock to downstream derivatives and end product markets. The conference will be held in Berlin from September 10-11, 2013. The first Butadiene and Derivatives Conference was held September 11-12, 2012, also in Berlin. Details for the conference are here.

LANXESS points to weak tire and automotive markets for 12% sales decline in 1Q

Filed under: Auto, General, Rubber Chemicals, Tires — Notch @ 10:35 am

LANXESS reported lower-than-expected earnings in its first quarter due to a weak market environment, particularly in the tire and automotive industries. First-quarter sales were down by 12 percent year-on-year to EUR 2.1 billion, mainly due to lower volumes and fallen selling prices.

Sales in the Performance Chemicals segment, which includes both the Rubber Chemicals and Rhein Chemie businesses, decreased by 7 percent to EUR 520 million. Volumes declined as a result of the weak demand from the construction industry due to the long winter and from the business units linked to the tire industry. Selling prices were stable. EBITDA pre exceptionals, at EUR 51 million, was EUR 32 million below the prior-period figure.

LANXESS anticipates a slight improvement in business for the second quarter. “The weak demand from the tire and automotive industries persists, but customer destocking is slowing down. We currently anticipate EBITDA pre exceptionals in the second quarter to improve sequentially but to be below EUR 220 million,” said LANXESS’ Chairman of the Board of Management Axel C. Heitmann. “The market environment will remain weak and volatile with low visibility persisting. We nevertheless expect an economic improvement in the second half of this year. Asia, particularly China, will perform substantially better, whereas market conditions in Europe will remain difficult.”

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