Carbon black consumption to reach 8.2 mmt in the year 2004.

Freedonia Group is predicting that world carbon black consumption will increase three percent per year through 2004 reaching 8.2 million metric tons, tracking gains in rubber demand during the same period. The vast majority of carbon black finds use as a reinforcement in vulcanized rubber goods, including more than two-thirds for tires alone.

Freedonia, a Cleveland-based industrial market research firm, says in its new study, World Carbon Black, that special blacks will offer the market's strongest gains, although demand will be increasing from a relatively low base. While special blacks are a minor segment as measured in tonnage, they command considerably higher per-kilogram values than commodity furnace blacks, and thus will continue to be the focus of research and development activity. In addition to higher margins, a strong position in special blacks offers suppliers greater protection from cyclicality in the rubber and motor vehicle industries.

Growth in the developing regions of the world will more than offset slower gains in developed regions. Asian countries that suffered from a major recession only a few years ago will rebound to post robust growth. Within the region, the large markets of China and India will post particularly impressive gains due to ongoing development of their respective motor vehicle and tire industries. Japan will maintain one of the world's largest markets for carbon black, although domestic demand will grow at a pace below the global average due to weakness in the country's motor vehicle and rubber industries, according to the study.

Eastern Europe and Latin America will also post above average gains in line with their ongoing development. North America's market will continue to expand, despite its strong base in 1999. The huge tire and motor vehicle industries in the U.S. will be the primary factor behind these gains, but rapid growth in the Mexican carbon black market will also boost regional demand. Western Europe will hold the slowest growth prospects among all major regions, primarily as a result of declining motor vehicle production.

Demand for carbon black used in tires and tire components will benefit from rising tire production levels, growing three percent per year to 5.5 mmt in 2004. Demand for carbon black used in non-tire applications is projected to rise three percent per year through 2004 to 2.2 mmt, with consumption remaining primarily linked to industrial rubber products such as belts, hoses and mechanical goods. Gains will be attributable to increased industrial activity, as well as demand from the OEM and replacement automotive markets.

Table 1 - world carbon black demand (,000 metric tons)

                                                % Annual
                                                 growth

                     1994    1999    2004    99/94   04/99
World carbon
  black demand       5,942   7,047   8,160     3.5     3.0
North America        1,721   1,926   2,135     2.3     2.1
Western Europe       1,149   1,338   1,430     3.1     1.3
China                  462     679     875     8.0     5.2
Japan                  723     831     915     2.8     1.9
Other Asia/Pacific     979   1,203   1,520     4.2     4.8
Other regions          908   1,070   1,285     3.3     3.7

Tread rubber shipments, retreaded tires decline

Strong demand for new commercial truck replacement tires in 2000 resulted in weakened demand for the tread rubber used to produce retreaded tires, according to the Rubber Manufacturers Association. Shipments decreased by 7.9% from the 1999 level of 536 million pounds to 493 million pounds in 2000.

According to the Tread Rubber Market Analysis Committee's forecast for 2001, the general softening of the U.S. economy, as well as the contraction of the commercial truck sector experienced during the latter half of 2000, will contribute to a further slowdown in shipments by 3.7%. Furthermore, an overall decline in commercial truck ton-miles has directly affected demand for retreaded tires.

However, this trend is expected to reverse course in 2002 as the economy gets back on track with a forecasted growth in GDP of approximately 3%. Additionally, the resumption of a normal annual growth pattern in the demand for commercial truck tires will result in an annual growth rate of 1.9% for shipments of tread rubber from 2001 to 2006.

Over 20 million retreaded tires were sold in the United States in the year 2000, with sales totaling more than $1.5 billion.

The Tire Retread Information Bureau in its 2001 fact sheet says that approximately 26.2 million retreaded tires were sold in North America in 2000 with sales totaling more than $2 billion. TRIBs figures include Canada. A breakdown of their figures shows:

* 1.5 million retreaded passenger car tires;

* 6.3 million retreaded light truck tires;

* 18.2 million retreaded medium and heavy duty truck tires;

* over 750,000 other retreaded tires (aircraft, off-the-road vehicles, industrial/lift trucks, motorcycles, farm equipment, specialty, etc.).

* In 2000, the total replacement medium truck tire market in North America was approximately 33.8 million tires, of which more than 18 million were retreaded.

* There are approximately 1,200 retreading plants, a large percentage of which are owned/operated by independent small businesses whose collective investment is over one billion dollars. The remaining plants are operated by new tire makers and a major tread supplier.