Cabot expects demand momentum to continue 

Boston, Massachusetts – Cabot Corp. has seen a sharp rise in its second quarter results and expects the “robust and broad-based demand” to continue in the second half of the year.

The US company posted a second consecutive quarter of record earnings (EBIT) within its Reinforcement Materials segment, which includes the production of rubber carbon black materials. 

The segment’s earnings rose 45% to $81 million during the first three months of 2021, on 22% higher sales of $434 million, Cabot announced 3 May. 

The company linked the increase in earnings to “significantly higher volumes across all regions and improved pricing in Asia.” 

Higher volumes were driven by demand increases across all regions compared to the same quarter last year, which was impacted by Covid-19 shutdowns.

During the first half of its fiscal year, Cabot said it had seen strong demand in its key tire, automotive and industrial end use markets and anticipated the underlying demand to remain strong during the second half.

In particular, Cabot said, demand was “really strong” for replacement tires as freight miles remain very strong globally. Additionally, it noted that passenger car miles have recovered to 2019 levels in certain geographies.

“[Rubber carbon black] Demand is very strong right now and so therefore utilisation rates are pretty high right now in the high 80s close to 90% in the most recent quarter,” said president and CEO Sean Keohane.

However, against this demand outlook, the supplier expect some impact from the flow-through of higher raw material costs in Asia and moderating volumes into automotive applications due to the semiconductor chip shortage. 

In addition, the company expects to incur higher fixed costs as it will carry out certain maintenance and turnaround activities, pointed out Keohane.