Orion expects new demand patterns amid trade ‘reordering’

Houston, Texas – Orion SA has reported a weak first-quarter performance in its rubber carbon black segment but expects a shift in demand patterns in the coming months due to “trade reordering.”

Over the three months to 31 March, the business unit increased volumes by 4.7 kilotonnes, or 2.5% year-on-year, to 190 kilotonnes, driven by higher demand in the Americas and Asia-Pacific.

Segment sales declined by $15 million (€13 million), or 4.5%, to $317 million, primarily due to lower oil prices and unfavourable foreign exchange effects.

The unit reported adjusted earnings (EBITDA) of $40.8 million, down 28.9% compared to the first quarter of 2023, said Orion on 7 May.

The decline was mainly attributed to “unplanned downtime, unfavourable timing from the pass-through of raw material costs, and customer and regional mix.”

However, CEO Corning Painter said these factors masked “an otherwise much stronger underlying business performance.”

“We continue to expect a prospective net benefit from auto sector tariffs and their impact on imported replacement tires, insofar as relieving market share pressure on US tire manufacturing,” Painter said.

According to Orion’s first quarter presentation, current automotive tariffs are likely to benefit regional tire and carbon black suppliers, particularly in the US and Europe.

Targeted tariffs, it said, will have less impact on US OEMs and are expected to support local manufacturing.

In its trade assessment, Orion classified US and EU tires, along with domestically produced carbon black, as “tariff advantaged.”

In contrast, carbon black and tires produced for export without tariff protection were viewed as 'more exposed'.

The company said a trend toward regionalised supply chains could benefit western tiremakers and European carbon black producers.

As a result, Orion expects demand patterns to begin shifting in three to four months, with broader effects extending through 2026 and 2027.

However, Painter warned that Orion would not be immune if broader tariffs were to trigger “a pronounced global economic slowdown.”