Cabot expects lower volumes, better pricing in China

Boston, Massachusetts – Cabot expects lower volumes but stronger pricing in China as a drive to increase environmental standards in the country gathers pace.

In a 2 Nov conference call, Keohane said the Chinese government was “intensely focused” on air quality index (AQI), particularly in winter where household heating is supplied through burning coal.

There had been circumstances where the government had mandated “curtailments of all industry” to address low air quality level, Keohane told analysts during the call to discuss Cabot’s full-year financial report.

“As a result, it is possible that we could experience some impact to our volumes in the winter months,” added Keohane, though noting that lower carbon black supply should favourably impact pricing.

“Based on our current view of the markets, the dynamic environment in China and the still ongoing tire-customer contract negotiations, we expect the annual EBIT [in reinforcement materials segment] of $200 million to $220 million for fiscal year 2018,” the Cabot boss stated.

Quotes sourced from conference call transcript by Seeking Alpha.