Cabot eyes carbon black capacity rationalisation amid slow demand

Boston, Massachusetts – Cabot Corp. is mulling capacity rationalisation within its Reinforcement Materials business, which primarily supplies carbon black products for tire and rubber applications.

The group is in the process of finalising plans to rationalise carbon black capacity in the Americas and Europe amid continued slow demand, said Cabot in a 3 Feb statement.

“The demand environment in Reinforcement Materials remains challenging and continues to be impacted by elevated levels of tire imports into the western geographies of Europe and the Americas,” said Sean Keohane, president and CEO.

Focusing on “countermeasures to manage this impact,” Cabot will consider cost reductions, optimisation actions across our global footprint and capacity rationalisation, he added.

Cabot said it targeted an additional $30 million (€25 million) of savings in the current fiscal year, ending 30 Sept, through global programmes focused on further enhancing “long-term cost competitiveness.”

These, it said, include procurement savings, headcount reductions and accelerating technology deployment targeting improved yield and manufacturing efficiencies

The group is also looking to reduce capital expenditures outlook to $200 - $230 million.

In the first quarter, ended 31 Dec 2025, Cabot’s Reinforcement Materials unit reported earnings (EBITDA) of $121 million, down 18% year-on-year.

Volumes declined 7% year-on-year primarily due to lower production levels and year-end inventory management by tire customers in the Americas as well as “increased competitive intensity in Asia Pacific.”

Earnings were impacted by 'weak' carbon black demand in the West, resulting in lower plant utilisations in the Americas and Europe.

Furthermore, Cabot noted that its latest round of customer negotiations reflected the weak conditions, which resulted in “year-over-year price reductions in Western regions and volume loss in Europe.” 

Despite the weak start to the year, Cabot said it expected tire production in the western regions to “return to growth for calendar year 2026 and 2027,” citing GlobalData forecast.

Effective tariffs and anti-dumping duties, it noted, could help “moderate import levels” and support a recovery in domestic tire production in western geographies.

In addition, improvement in demand from delayed tire replacement cycles would also support volume growth.

Furthermore, the group expects continued efforts by tire manufacturers to leverage their “Tier 2” brands to support higher tire production in the West.