Analysis: Price-rises add to pressures facing EU carbon black market

London – European carbon black market is under increasing pressure as leading suppliers have announced price-hikes in the region in the aftermath of energy market developments.

The move, explained Cabot, is in response to “significant cost pressures and sourcing challenges for oil-derived feedstocks that are specifically selected for the production of carbon black in the EMEA region.”

The price adjustments will be between €60-90/tonnes, in addition to any applicable feedstock index-related adjustments, for carbon black products in Cabot’s Reinforcement Materials segment.

The price-rise adds to a mix of factors impacting the European carbon black market which is facing falling production as well as rising imports.

Questions remain over the direction of the supply/demand balance in the region.

After the downturn of 2009-2010, the industry never returned in terms of volumes. A lot of capacity was taken out and permanently removed from the EU,  according to Paul Ita, president of Notch Consulting.

“The market has been a bit weak but the weakness has been due to imports rather than due to the weak underlying demand,” said the head of the US-based tire and rubber consulting group during a presentation at Tire Technology Expo in Hanover, Germany in February.

This is while, according to Ita, about 15 percent of the carbon black market in the tire industry was under threat of replacement by silica fillers.

In particular, he said that there “is a push towards using more silica in truck and bus treads”.

Commenting specifically on the European market, the market analyst said that since 2011, about 35-40 percent of the EU demand has been imported. And Ita believes that the import pressure would continue to increase in the region.

According to Ita, Russia is the largest exporter of carbon black to the EU, and the weak rouble is encouraging further exports to the EU.

As one of the key exporters to Europe, Russia’s Omsk Carbon set up a European HQ in Germany last year and is increasing production this summer.

Company officials told ERJ that Omsk was preparing for the start-up of its Mogilev, Belarus plant in July or August 2016, slightly behind the original schedule.

Production at the €95-million plant will start in the summer and the plant will gradually ramp up to full capacity of 200 kilotonnes per annum by 2019, said Alexei Kiselyov, director of foreign economic relations at Omsk Carbon.

Elsewhere, Luxembourg- based Orion Engineered Carbons also completed the acquisition of the remaining shares of the carbon black business Qingdao Evonik Chemical (QECC) in Qingdao, China, in January.

The total purchase price for 100 percent equity of QECC was approximately €28 million, according to Orion CEO Jack Clem.

Clem said his company was “pleased with the positioning and performance” of the business and its integration within Orion, adding that it would add to Orion’s market position in Asia Pacific.

In Europe, however, the company had to introduce a carbon black oil index surcharge effective 1 April, as energy price pressure and volatility impacted its formula-priced agreements.

Due to the “impact of energy market developments… current carbon black sales prices no longer adequately cover Orion’s variable costs of production,” said an 8 March company statement.

This, it added, had not been anticipated in the price formulas used for rubber carbon black sales.