Cabot, Tokai Carbon, Orion, leading carbon black companies predict the trend in the fourth quarter

　　According to reports from foreign media, there are varying opinions within the industry regarding how the global carbon black market will evolve in the fourth quarter of this year.

　　In recent weeks, industry insiders have conveyed mixed signals about the carbon black industry, particularly concerning pricing and the anticipated balance between supply and demand.

　　The performance reports for the first half of the year released by the three major carbon black suppliers have consistently highlighted a common theme: despite sales remaining flat or even decreasing compared to the same period last year, both revenue and profits have continued to grow.

　　This trend is exemplified by Tokai Carbon's operational performance in the first half of the year. While the sales volume of rubber carbon black in its carbon black business unit remained on par with the previous year, sales surged by 15% year-on-year, and operating profits more than doubled. Tokai Tanso attributed this success to enhancements in productivity and the allocation of environmental investment costs, particularly in North America. Similarly, Cabot Corp.'s Reinforcement Materials unit reported a 17% increase in profits, despite experiencing a 14.5% decline in revenue and an 8% drop in volume during its fiscal third quarter (calendar second quarter).

　　Cabot suggests that this is primarily a result of the reduction in sales of rubber carbon black due to a sluggish replacement tire market. The steepest year-on-year sales decline was observed in Europe, the Middle East, and Africa, with a 12% decrease, followed by a 10% decline in the Americas, and a 10.5% reduction in Asia. Orion Engineering Carbon Co., Ltd. also adhered to this pattern. Profits in its rubber carbon black business saw a significant year-on-year increase, largely attributed to rising contract prices.

　　However, Orion experienced a 14% decline in sales of rubber carbon black in the three months ending on June 30, along with a year-on-year sales decrease of over 9%. The company's performance report pointed out that the drop in sales was mainly a result of "customer destocking and delayed destocking" in the Europe, Middle East, and Africa region, as well as in the Americas.

　　Despite the persisting weak outlook for market demand, the three major carbon black suppliers, at least for the remaining of this year, maintain an optimistic outlook regarding their earnings and pricing.

　　Among them, Cabot is among those who hold this positive perspective. The company anticipates an increase in carbon black contract pricing in 2024, assuming market fundamentals in Europe and the United States remain "unchanged." Cabot's President and CEO, Sean Keohane, informed market analysts, "We have a certain percentage of customers who have signed multi-year business contracts because they anticipate price increases next year." Keohane added during the financial report conference call on August 5, "These price increases will serve as the pricing basis for our remaining contracts in 2024 and should reflect the actual level of price increases." Among the uncertain factors lies the potential impact of the European Union's restrictions on Russian carbon black exports to Europe in June 2024.

　　In response, Cabot's leader Keohane commented, "For customers, the status of supply is naturally very important; I think securing the reliability of supply is crucial to them." However, there are differing views on the market trend of the carbon black industry in the coming months from some parties at the negotiation table.

　　Among the numerous anonymous comments provided by the European Rubber Journal, one individual remarked, "Global markets are on a downturn and are unlikely to recover in 2024. So, let's stay vigilant and avoid unnecessary panic regarding supply conditions." As for the potential impact of the EU's new sanctions on Russia, another perspective is that "all major Russian carbon black dealers have warehouses fully stocked in Europe to meet the demands of 2024 and 2025." Some believe that "the supply of carbon black from external sources is sufficient to meet the demand of the European market," especially considering that overseas manufacturers are currently expanding their production capacity, and "current global shipping costs are low, making imports of carbon black particularly appealing."