News from Notch Consulting, Inc.

On Tuesday, Continental Carbon Company issued a letter to customers, employees, and partners announcing the closure of the company’s carbon black plant in Phenix City, Alabama as of December 31, 2022. As previously reported, the plant is subject to a Consent Decree with the US EPA that sets December 31 as the deadline for the installation of equipment to reduce emissions of SOx/NOx. Continental has been seeking an extension on the deadline.

In a letter announcing the closure, Dennis Hetu, President of CCC, said:

CCC has been engaged with the EPA and DOJ for several months now in an exhaustive attempt to reach an amendment to the Consent Decree and extend the deadline. We have not been asking to be absolved of the requirements but simply a request to extend the deadline – as all of our competitors in the market have requested. However, as of the writing of this note the EPA and DOJ have provided us with one simple answer – NO! They have no desire nor interest to extend our deadline and do not seem to be concerned with the impacts to the economy, supply chain, employees, or even the fact that this will encourage more imports from two nations (China and Russia) who do not concern themselves with environmental impacts.

The Environmental Protection Agency and the US Department of Justice have ruled that no extension or grace period will be granted to Continental Carbon Co. regarding the installation of environmental remediation equipment at its Phenix City, Alabama carbon black plant, Notch has learned from industry sources. This means that, barring some further development, the factory will cease operations by January 1, 2023. Continental Carbon had requested a two- to three-year extension on the completion schedule stipulated in its consent decree with the US EPA/DOJ, which requires a DGS (dry gas scrubbing) or WGS (wet gas scrubbing) system for sulfur dioxide and particulate matter to be installed at the plant by December 31, 2022 and in continuous operation by 180 days thereafter.

Continental Carbon has already completed the required remediation projects for its other two carbon black plants in the United States. The schedule for these projects was September 1, 2020 for Sunray, Texas and April 1, 2021 for Ponca City, Oklahoma. The consent decree was signed in 2015 and modified in 2017. The effort to keep the factory open received significant local and regional support.

The factory has 90,000 tons/year of capacity for tread grades, though in recent years it has been operating at partial capacity. Notch estimates that the closure will remove about 40-50 KT of supply from the US carbon black market.

On October 6, Cabot Corporation announced it will raise prices globally for carbon black products sold by its specialty carbons business. The increase will be implemented for all shipments on or after November 6, 2022, or as contracts allow. The company said in a press release that the price increase is necessitated by the rise in raw material costs as well as other production-related costs. The increase and timing will vary by product and geography.

Tokai Carbon CB will raise prices on all grades of carbon black in North America by $0.20/lb effective August 1, 2022. The company said the price increase is necessary to pay higher operating costs associated with ongoing investment in equipment to meet increasingly rigorous environmental standards and higher operating expenses required to ensure continuity and increase overall reliability for customers.

On May 25, Orion Engineered Carbons announced that it will complete its gas black expansion in Germany at plants in Dortmund and Cologne by early 2023. Orion is the only carbon black producer in the industry with gas black capabilities. Gas blacks, known for excellent dispersion and coloristics, are used in coatings, printing ink and other applications.

“The expansion in Germany is core to our strategy to further strengthen our leadership in the premium specialty market,” Sandra Niewiem, senior vice president of global specialty carbon black and the EMEA region, said in a press release. “As we experience continuous high demand for gas blacks, we are confident that the extra capacity will be welcomed by our customers.”

Earlier this month, Orion announced plans to build the only plant in the U.S. producing acetylene black, a conductive carbon black used in lithium-ion batteries, high-voltage cables and other products powering the global transition to electrification and renewable energy. The factory will be located in La Porte, Texas, south of Houston, and will be will be backed by a long-term agreement for acetylene supplied from a neighboring site owned by Equistar Chemicals LP, a subsidiary of LyondellBasell.

Acetylene is a colorless gas widely used as a chemical building block. Orion’s production process turns acetylene into a powder, which is added to lithium-ion batteries to enhance electrical conductivity. The material plays a similar role in high-voltage cables used for wind and solar farms.

Orion will invest between $120 million to $140 million in the facility, expected to start up in the second half of 2024. This investment should increase the company’s conductive additives capacity by approximately 12 kilotons per year.

“With this investment, we will quadruple our effective manufacturing capacity of acetylene-based conductive additives,” Corning Painter, Orion’s CEO, said in a press release. “We are already experiencing high demand for this material, so expanding capacity for it is one of our top investment priorities and a major milestone in our growth plans. This is a very big day for Orion.”

The company, which has a similar plant in France with locally supplied acetylene gas from LyondellBasell, is the sole producer of acetylene-based conductive additives in the European Union. Demand for battery additives is expected to grow rapidly amid a global boom in the construction of gigafactories making lithium-ion batteries.The plant will have a favorable environmental profile and will be subject to obtaining the routine regulatory approvals.

Birla Carbon today announced a 15% price increase for all carbon black products manufactured in North America, effective July 1, 2022. All shipments made on or after this date are subject to the price increase.

Increasing costs in materials, freight, logistics, and operations are the key reasons for this necessary change.