News from Notch Consulting, Inc.

June 4, 2021

Cabot raising carbon black prices and adding feedstock surcharge

Filed under: Carbon Black — Notch @ 1:57 pm

On June 1, Cabot Corporation announced a price increase for all carbon black products sold by its Reinforcement Materials segment in the Europe, Middle East and Africa (EMEA) region, effective July 1, 2021, or as customer contracts allow. All Black Pearls®, CRX®, Endure®, Propel®, Regal®, Sterling®, Spheron® and Vulcan® carbon black products will increase by €115 per metric ton, in addition to any applicable index-related adjustments. According to a press release announcing the move, the price increase is necessary to address rising costs associated with manufacturing, regulatory and environmental compliance, packaging, and logistics.

This increase in the EMEA region follows a previous announcement on May 12 that Cabot was raising prices by $0.06 per pound on all carbon black products sold by its Reinforcement Materials segment in North America, effective July 1, 2021, or as customer contracts allow. According to Cabot’s press release, this price increase is necessary to address the increasing costs to provide reliability and supply assurance to customers as the industry continues to rebound strongly from the COVID-19 crisis and experiences rising utilizations in line with long-term fundamentals. At the same time, Cabot is investing approximately $200 million in NOX and SO2 reduction projects to meet requirements related to the U.S. Environmental Protection Agency’s (EPA) national enforcement initiative to control air emissions from carbon black manufacturing facilities. Cabot’s operating costs are increasing substantially as these systems are put into service to meet industry deadlines in 2021 and 2022. In addition, Cabot is making significant investments in its manufacturing network to maintain and enhance equipment reliability to meet strong customer demand even at high plant utilizations.

In addition to the price increase, effective for all shipments made on or after July 1, 2021, to the extent allowed under customer contracts, Cabot will apply a feedstock surcharge of $0.05 per pound to all carbon black products sold by its Reinforcement Materials segment in North America. This replaces the previously announced feedstock surcharge of $0.03 per pound that was effective as of October 1, 2019. According to Cabot, the increased feedstock surcharge is necessary to address the rising premiums for rubber carbon black feedstock relative to fuel oil indices in North America. These premiums are being driven by changes in the crude oil refining industry, which in turn has been affected by the IMO 2020 regulations, reduced demand for gasoline since the start of the COVID-19 crisis, and several severe weather events.

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