According to CEO Jack Clem the company “expects to see some positive impact on margins in the next few quarters.”
Clem, however, admitted that cost negotiations were continuing, adding that it “is premature for us to make any assessment as to how these efforts will play out over the course of this year.”
More significantly, the Orion boss said that the surcharge was just a temporary fix and that more structural measures were needed to shore up rubber black prices longer term.
According to Clem, the problem for Orion, and other suppliers to tire and rubber manufacturers, is overcapacity and slow growth in the many markets around the world.
In May, Birla Carbon was first to announce a structural change, the closure of its plant in Hanover, Germany, and of a production line at its Alexandria, Egypt facility.
The company said it was restructuring its operations in the European and African region, including reduction in corporate personnel, to preserve the long-term future success of the company.
Birla Carbon plans to consolidate and move production to its remaining manufacturing facilities in the region once the restructuring is complete.
Orion also announced the plan to possibly close their site in Ambès, France on 3 June. This site also produces extrusion carbon black products for non-tire applications, similar to the Birla site in Hannover.
“These two plant closure announcements surely are supporting recent price increase announcements, both in psychology and, later in the year, through a change in the supply-demand balance for extrusion carbon blacks,” explained von Wolfersdorff.
But there are also new and existing entrants into the European carbon black market.