Most carbon black manufacturing units in the western world, especially in North America and Europe, are being forced to shut down their operations because of the heavy competition they are facing from low cost Asian manufacturers. That’s the view of Tech Archival analysts, who said as much in a report entitled “China Carbon Black: Assessment, Opportunities & Forecast Up-to 2018,” which was published Jan. 24.

Meanwhile another Carbon Black industry report, this time published by research and markets, suggests that the global specialty carbon black market is expected to grow at the CAGR of 5% by 2018.

The report adds that the market for specialty carbon black has remained consolidated and there are only few players operating globally. This can be attributed to the high inclination of carbon black manufacturers towards commodity carbon black as a result of high usage for tire production in the rapidly growing automotive industry. However, the specialty carbon black market has witnessed entry of new players during the last 3-4 years, either through mergers and acquisitions or shift in focus of rubber black players towards specialty carbon black. The entry of these players can be attributed to high profit margins associated with specialty carbon black. In addition, demand for high quality specialty carbon blacks is also benefiting producers, as they are being majorly demanded by end-user industries, such as printing ink and coatings.

Carbon black globalization

According to the report, the globalization of carbon black manufacturing has resulted in a capacity shift towards Asia. It is expected that by 2015, nearly 65% of the global carbon black demand will come from Asia, which will further strengthen region’s position as the largest producer and consumer of carbon black and the trend towards investing in capacity in these regions.

Benefitting from this global shift, the Chinese carbon black market recorded total sales volumes of more than 3 million tons and generated nearly $5 billion USD in revenues in 2013. Likewise, the total domestic production volumes and export volumes grew incessantly, continuing China’s presence as the world’s largest producer and net exporter of carbon black by 2013.

“With an abundance of resources, significant foreign investment, and a favorable business climate, China has rapidly transformed itself into world’s fastest-growing economy. Benefitting from this positive environment in the country, a large number of players entered into carbon black manufacturing and have been successful in operating scale economies which allows them to offer large quantities of low priced carbon black,” the report surmised.

Furthermore, since Chinese manufacturers are generating good profit margins, Tech Archival estimates that performance of the Chinese carbon black market will continue growing steadily right through 2018, reaching annualized revenues close to $7 billion USD in 2018.

Source: Tyres & Accessories