News from Notch Consulting, Inc.

May 30, 2016

Reflections of Fort Worth

Filed under: Carbon Black — Notch @ 10:39 am

The biennial Carbon Black World convention was held last week in Fort Worth, Texas. The conference was hosted by Sid Richardson Carbon and Oil and organized by Smithers Rapra. For the first time ever, the carbon black conference was co-located with the Traction conference, which focuses on the tire industry, and after an opening session, attendees could choose between two programs of talks occurring simultaneously. Betsy Price, the gracious mayor of Fort Worth, opened the conference and gave a warm welcome to the city, which bills itself (accurately, I think) as a big city with a small town feel. The well organized and comprehensive program of talks was augmented with a visit from the Dallas Cowboy cheerleaders, great barbecue, and a golf outing. I was pleasantly surprised by the number of attendees from China, India, and Russia, surely a sign that the carbon black industry continues to globalize. Ricky Magee of Birla Carbon did yoeman’s work by chairing the entire conference, and doing a great job at that. Thanks too go out to all of the conference organizers and sponsors, with a special debt of gratitude to Bill Jones and the crew at Sid Richardson, who really made the Fort Worth conference one of the most welcoming I can recall.

The carbon black industry is coming off of an unusual year in 2015. Global volumes were up slightly (~1%), but market value fell 20% due to declining oil prices. Among the BRIC countries (Brazil, Russia, India, China), only India saw positive growth in 2015, while China’s carbon black volumes were flat and both Russia and South America saw significant declines. On the other hand, both North America and the European Union saw good growth in volumes (~3.0% to 3.5%). Despite the solid volume growth, suppliers in both North America and the EU remain under pressure due to an influx of lower cost imports from China and Russia, which have impacted prices and lowered utilization rates. Looking forward, we have entered an era from 2015 to 2020 where both North America and the EU will see greater investment in new tire production capacity than China, a situation unthinkable only a few years ago. The future will be interesting indeed.

Speaking of the future, Notch Consulting will publish the new edition of the Carbon Black World Data Book in June 2016. This is our annual report of the state of the global carbon black industry, and the subscription includes quarterly supply/demand updates through April 2017 as well as monthly carbon black pricing for the US, EU, Brazil, and China. For more information, write to us at info @ notchconsulting.com.

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May 27, 2016

Orion raising NA carbon black prices

Filed under: Carbon Black — Notch @ 9:39 pm

On May 25, Orion Engineered Carbons announced a price increase for all rubber black grades sold by its Rubber Carbon Black Business Line in North America as of July 1, 2016. Due to increasing operating expenses and the cost required to meet more stringent customer quality standards, invoice prices for Rubber Carbon Blacks will be adjusted by 6%, to the extent in line with existent contracts and agreements, Orion said in a statement. These invoice price changes will apply besides respective raw material adjustments. Orion will also change its standard packaging surcharges effective July 1, 2016. Further adjustments may be implemented for certain special Rubber Black grades on an individual basis.

 

May 25, 2016

Longxing Chemical management resigns

Filed under: Carbon Black — Notch @ 12:18 am

David Shaw of Tire Industry Research called my attention to this article from China TimesThe Chinese language article reports that seven key members of the Board of Directors at Longxing Chemical (Shahe, Hebei, China) have resigned per a notification to the Shenzhen Stock Exchange. Longxing Chemical is the third largest carbon black producer in China and a leading producer of precipitated silica.

According to the notice, the seven resignations are:

  • Yu Jumei, General Manager and Senior Accountant
  • Ma Baoliang, Deputy General Manager 
  • Ms. Li Ying, Chief Financial Officer
  • Liu Heshan, Board member
  • Lixue Bo, General Manager
  • Jiang Hao, Director 
  • Zhou Wenjie, Vice Director and Supervisor

At a Board meeting on May 17, the following replacement appointments were made:

  • Mr. Zhang Wenbin, General Manager and Chief Financial Officer
  • Mr. Ren Weiliang, Executive Vice President (responsible for the company’s overall carbon black business)
  • Mr. Qi Yong, Deputy General Manager

According to the article, there are three reasons that the management of Longxing Chemical decided to resign at this time:  

1. The company had planned financing and reorganization for three times in 2011 and 2015, respectively. However, all plans failed after all.

2. The company failed in the competition with the peer company (Jiangxi Black Cat Carbon Black Inc.,Ltd.). Longxing Chemical ranks No.3 in carbon black field, however Jiangxi Black Cat Carbon Black Inc.,Ltd. ranks No.1. The main reason for the failure is the higher cost of feedstock for Longxing Chemical compared to Black Cat. (Black Cat is back-integrated into coal tar distillation but Longxing is not.)

3. The price of carbon black continues to decline due to excess capacity. Now Longxing Chemical falls into losses. This situation destroys the confidence of the board. As a result, the board decided to resign before the situation becomes worse.

The company has called an EGM (Extraordinary General Meeting) for June 2 at 9:30 AM. Voting on the new board will be open on the web June 1 and June 2.

Related public filings (all Chinese language): 

Filing 1

Filing 2

Filing 3

May 17, 2016

Sid Richardson announces carbon black price increase

Filed under: Carbon Black — Notch @ 2:14 pm

Sid Richardson Carbon, the largest carbon black producer in the United States, today announced a price increase for carbon black effective July 1, 2016, or as contracts allow. Price increases of 4% to 6% will be implemented. The company also will implement changes to its Standard Terms and Conditions of Sale and its Standard Packaging and Premium Charges, in each case effective July 1, 2016.

In the press release announcing the increase, William Jones, President and CEO of Sid Richardson Carbon, said that the price increases are necessary to offset increased operational costs associated with increasing governmental regulations, increases in the cost of labor and capital equipment necessary to maintain plant infrastructure, and inflation-related impacts.

Here is the press release.

 

 

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