News from Notch Consulting, Inc.

On August 19, Cabot Corp. announced that it will apply a Feedstock Surcharge of $0.03 per pound for all carbon black products sold by the Reinforcement Materials segment in North America, effective October 1, 2019 and to the extent allowed under customer contracts.  This replaces the previously announced feedstock surcharge of $.01 per pound that has been in effect since April 1, 2019.

According to a company press release announcing the increase, the carbon black feedstock market in North America is seeing increasing effects from changes in the types of crude oil being refined and an increase in demand for low sulfur fuel oil associated with the upcoming 2020 International Maritime Organization (IMO 2020) regulation, also known as MARPOL. As a result, Cabot is seeing changes to the type and availability of material with the specific quality required to produce carbon black.

Today, Cabot Corporation announced that it will implement a feedstock surcharge for all specialty carbon black products manufactured in North America. The decision is driven by new low sulfur fuel regulations. Cabot will institute a surcharge of $0.07/pound for all orders shipped on or after September 16, 2019, or as customer contracts allow, for all specialty carbon black products produced by its Performance Chemicals segment in North America.

Cabot’s specialty carbon blacks are produced from high quality, low sulfur feedstocks that are sourced from a similar pool as marine fuels. This market is undergoing significant change due to the 2020 International Maritime Organization (IMO 2020) fuel sulfur regulation, also known as MARPOL. Though the IMO 2020 regulation is set to be implemented in January 2020, changes in certain supply chains are already evident.

In a press release announcing the decision, Jay Doubman, Cabot’s senior vice president and president, Performance Additives said, “We recognize this new rule will bring long-term benefits to the environment and human health; it also presents disruption in the industry and comes with upfront costs to adapt. This change in industry structure will take time to stabilize, and we are committed to providing transparency and predictability to our customers.”

Cabot expects that once new lower sulfur indices are stabilized and fully adopted by the supply chain, it will transition to pricing and indices that appropriately represent the input costs of carbon black.

On August 1, Birla Carbon announced it will raise prices for all specialty carbon blacks in North America by 9% effective September 1, 2019. All shipments made on or after this date are subject to the price increase. According to Birla, the increase is necessary due to extreme cost increases in carbon black feedstock. In addition, Birla Carbon will implement a revised schedule of fees for non-standard package services, also effective September 1, 2019. 

Here is the press release.