News from Notch Consulting, Inc.

June 10, 2020

ITEC 2020 shifts to virtual event

Filed under: Conferences, Coronavirus/COVID-19 — Notch @ 9:42 pm

The next International Tire Exhibition and Conference, which is scheduled for September 8-18, 2020, will transition to a virtual event this year. The biennial conference is sponsored by Rubber & Plastics News and typically held in Akron, Ohio. The decision was made in response to the COVID-19 pandemic. The dates of conference remain unchanged, with a livestream covering the conference sessions, including keynote speakers, individual presentations, and panel sessions.

June 8, 2020

Goodyear forecasts 50% drop in tire volumes in Q2

Filed under: Coronavirus/COVID-19, Rubber, Tires — Notch @ 12:42 am

In a 424B filing to the Securities and Exchange Commission dated May 13, 2020, Goodyear Tire & Rubber provided an overview of its actions in response to COVID-19 and a view of the tire industry’s performance in 2020.

We currently believe that our largest volume declines will occur in the second quarter of 2020, with volumes down approximately 50% compared to the second quarter of 2019. Overhead absorption will also continue to be adversely affected by reduced plant production during the second quarter of 2020. We are currently planning for our production to be down almost 25 million units versus the second quarter of 2019 in order to reflect expected demand and to reduce inventory.

In addition, our other tire-related businesses are also being significantly affected by the weakening economic environment. Traffic and volume at our retail locations is low and the sharp drop in business and leisure travel is adversely impacting our aviation business. Our chemicals business is also feeling the effects of the decline in tire production. In total, the year-over-year earnings decline in our other tire-related businesses is expected to be about $150 million during the second quarter of 2020.

For the full year of 2020, we now expect our raw material costs will be a benefit of $50 million to $100 million compared to 2019, excluding transactional foreign currency and raw material cost saving measures. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and this estimate could change significantly based on fluctuations in the cost of these and other key raw materials. We are continuing to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials.

June 3, 2020

JK Tyre launches US operations

Filed under: Tires — Notch @ 10:42 pm

JK Tyre, one of India’s leading tire producers, recently announced the creation of a new entity, Western Tires Inc. in Houston, Texas, which will act as the company’s marketing arm in the United States. JK Tyre has been exporting tires to the United States for more than 20 years, and the new company represents an expansion of those efforts. JK Tyre imports tires into the US from its factories in both India and Mexico.

Cooper restarts Mexico plant

Filed under: Tires — Notch @ 9:33 pm

Tire Business reports (subscription required) that Cooper Tire & Rubber is restarting production at its tire plant in El Salto, Mexico. Cooper first idled the plant on March 21 due to COVID-19 concerns. The plant was restarted on April 13th but idled again on April 28 under orders from the Mexican government, which deemed the plant to be non-essential. Cooper has implemented new health and safety procedures at the plant, and production was scheduled to resume on a limited basis on June 1.

May 12, 2020

Cabot reports Q2 FY 2020 results

Filed under: Carbon Black, Coronavirus/COVID-19, Uncategorized — Notch @ 12:04 pm

On Monday, Cabot Corporation reported results for its Q2 FY2020. Net sales declined to $710 million for the quarter ended March 31, 2020 from $844 million in the same quarter of FY2019, a drop of 16%. In Reinforcement Materials, volumes decreased 14% year-over-year as the COVID-19 pandemic impacted demand. The impact was most pronounced in Asia but impacted both Americas and EMEA demand at the end of the quarter. Offsetting the lower volumes were higher margins due to pricing and mix benefits in both the tire and industrial product lines. Net sales in the Reinforcement Materials business totaled $355 million for 2Q FY2020, down 20% from $445 million in the same quarter of 2019.

Changes in Reinforcement Materials volumes (Q2 2020 YOY change):

  • Global: -14%
  • Asia: -20%
  • Europe, Middle East, Africa: -13%
  • Americas: -8%

Performance Chemicals saw net sales of $245 million in Q2 FY2020, down 3.5% from $254 million in the same quarter of 2019.

Cabot held its earnings conference call on the results earlier today.

Tokai Carbon raises carbon black prices and changes price index for Japan

Filed under: Carbon Black — Notch @ 11:19 am

On April 13, Tokai Carbon Co. announced a price increase for carbon black in Japan of 6.0JPY/kg (US5.6 cents/kg) effective May 1, 2020. In addition, going forward carbon black prices will be revised using the crude oil index, as the index used in previous price revisions can no longer be used due to the impact of IMO regulations on bunker fuel oil sulfur content.

May 11, 2020

US Ford factories preparing to restart

Filed under: Auto, Coronavirus/COVID-19, Rubber — Notch @ 9:13 pm

On May 18, Ford Motor Co. will resume most North American vehicle production following the lifting of restrictions by Michigan Gov. Gretchen Whitmer, with parts depots resuming operations on May 1.

The Flat Rock Assembly Plant in southeast Michigan and Oakville Assembly Complex in Canada will remain closed until May 25.

May 7, 2020

Orion announces Q1 results, sales down 12.7% YOY

Filed under: Carbon Black, General — Notch @ 9:17 pm

On Thursday, Orion Engineered Carbons released their results for Q1 2020, reporting a 12.7% drop in sales and a 10.5% decline in volumes relative to Q1 2019. Declines were sharpest in Rubber Carbon Blacks, which showed a 14.6% decline in sales and an 11.1% decline in volumes. Specialty Carbon Black saw a decline of 9% in sales and 8.8% in volumes during the quarter. Specialty black demand was down mainly due to “weakening demand in the North America and Western Europe regions predominantly in the automotive and pipe markets.” Rubber black demand was down due to a “sharp decline in sales volumes beginning in mid-March as tire and auto manufacturing plants closed due to COVID-19.” Orion also attributed lower Rubber Black volumes to a “strategy as part of 2019 contract negotiations to emphasize raising price closer to reinvestment levels over volume.”

A few key takeaways from the earnings announcement:

  • OEC reported that all of its plants continued to operate during the quarter but the company implemented a flexible production schedule whereby reactors are run for a few weeks to restock inventories, then shut down.
  • OEC plants were at about mid-40s percent utilization in April.
  • More than 75 percent of tire plants served by OEC were fully or partially idled in April.
  • OEC expects tire manufacturing plant restarts to occur slowly.
  • In contrast to the tire market, only a few specialty customers were idled.

OEC will hold its earnings call on Friday, May 8 at 8:30 a.m. (EST).

May 5, 2020

Tire production resumes at Toyo plant in Georgia

Filed under: Coronavirus/COVID-19, General, Tires — Notch @ 11:05 pm

On May 3, Toyo Tire Holdings of Americas Inc. will reopen its White, Georgia tire plant, ramping up gradually on a revised shift schedule.  The plant has been idled since March 30 due to the COVID-19 pandemic.

Toyo is implementing additional health and safety measures based on CDC guidelines.

Enviro completes share issue to Michelin

Filed under: General, Rubber, Tire Recycling, Tires — Notch @ 10:54 pm

Scandinavian Enviro Systems AV (Enviro) has strengthened its financial position by completing a directed share issue to Michelin.  The investment was part of a long-term strategic partnership that provides Enviro with significantly improved conditions for the global establishment of recycling plants.  A final agreement is expected to be completed by mid-2020.

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