PCBL sees "steady recovery" signs despite US tariff impact

Mumbai, India – PCBL Chemicals Ltd. has seen its carbon black margins weighed down in the second quarter of fiscal year 2026, but remains optimistic about industry outlook. 

The Indian group reported a 9% year-on-year decline in carbon black sales for the quarter ended 30 Sept, to INR16.0 billion (€156 million).

Earnings (segment profit before interest and tax) over the three-month period fell 39.5% year-on-year to INR1.6 billion, the group anounced 17 Oct.

For its fiscal first half, carbon black sales increased by 8.1% to INR33.6 billion while earnings came in 48.0% lower at INR3.9 billion.

During the second quarter, PCBL saw “healthy growth” in carbon black sales volume with improved capacity utilisation,” said managing director Kaushik Roy during a 17 Oct conference call.

And, while margins were impacted by pricing pressure in a “relatively softer” market, PCBL believes “this phase has largely bottomed out and expects a steady recovery in profitability in coming quarters.”

Margins in carbon black, it noted, were influenced by US tariffs: customers purchasing patterns also reflecting broader economic uncertainties and tighter inventory positions.

Exports to the US account for around 5% of PCBL’s total carbon black volume “and with a 50% tariff in place, the business remains constrained,” Roy continued.

However, as US remains import-dependent for carbon black, PCBL expects both volume and margins to recover “once the situation stabilises.”

PCBL is, meanwhile, working to mitigate the impact of tariffs and “rebalance” its export strategy, as well as introducing efficiency measures across its operations to strengthen overall competitiveness.

And, with signs of recovery in the local automotive sector following tax-cut moves in India, Roy forecast the domestic tire market to “grow 6-8% in FY'26, led by stronger replacement demand in the second half.”

During the quarter, PCBL’s consolidated sales volume in the carbon black business increased by 5% quarter-on-quarter to reach just over 161 kilotonnes (kt) – translating into a capacity utilisation of over 99%.

Of the total carbon black sales volume, domestic sales volume stood at 99.5kt, while international sales volume stood at 62kt – representing 6% year-on-year growth. Tires accounted for 94kt of the total.

According to CFO Raj Gupta, the carbon black business has been doing about INR3.5 billion of business annually in the US, with volumes down by about 2kt in the second quarter.

While the tariff rate is 50%, the effective rate for PCBL is 20% as PCBL gets exemptions because it imports raw material for the US, explained Gupta.

“And 60% of the price at which we sell our material in the US consists of input from the US,” he explained. “So, it is only the balance 40% which gets tariffed at 50%.”

But, the CFO continued, US tariffs still represent around INR700 million a year impact at earnings level, “which has hit our numbers this quarter.”

Exports to the US last year accounted for in the region of 30kt, just 5% of PCBL’s carbon black volumes – converting to almost INR3.5 billion in sales revenue, added Gupta.

On the global outlook, PCBL pointed to new investment commitments by major international tire manufacturers to expand production capacity in North America through 2029.

According to Roy, Goodyear, Hankook, Bridgestone, Michelin and other tire makers have announced projects totalling several billion dollars, reflecting “long-term optimism in the sector despite current demand problems.”

While the quarter saw “short-term challenges,” including the tariff effect, temporary deferment of purchasing after the tax adjustment, and subdued macro sentiment, PCBL said the long-term supply–demand fundamentals for carbon black remain strong.

The company expects to enter a “renewed growth phase” as several strategic projects are scheduled to come online over the next 18 months, supporting sustained expansion and “long-term value creation.”