Carbon black demand to increase 3.5%.

The world market for carbon black is forecast to grow 3.5% per year to 10.1 million metric tons in 2010, up from 7.9 million metric tons in 2003, according to a market research report published by Notch Consulting Group. Market value is forecast to rise 5.1% per year to $8.1 billion in 2010, equivalent to an average weighted value of $0.80 per kilogram, up from $5.7 billion and $0.72 per kilogram in 2003, according to Notch.

In 2004, 68% of carbon black demand was related to the tire industry, while 24% was used in the manufacturing of non-tire rubber goods and 8% was used in specialty applications, the study says.

Reflecting larger trends in the rubber, tire and automotive industries, the carbon black industry no longer serves a group of self-contained regional markets, but rather a unified global market. As the tire industry continues to consolidate, the global purchasing power of the large tire companies is growing. This movement has been characterized by a shift in manufacturing capacity toward lower wage regions (particularly Asia) and reductions in tariffs and other trade barriers that had formerly limited trade among regions. Responding to these trends, carbon black suppliers have been streamlining their operations, closing their older and less efficient plants and expanding capacity in developing regions, particularly Asia and South America, according to Notch.

Last year was an unusually robust year for carbon black expansion activity. Total global nameplate capacity grew by 4% in 2004 to 9.5 mmt per year, reflecting a net addition of about 375,000 metric tons per year of new capacity from year-end 2003. Based on announced expansions, the carbon black industry is expected to add about 175 ktpy of new capacity in 2005. This strong expansionary phase follows a weaker period from 2000 through 2002 when world capacity was essentially fiat. Industry conditions began to improve in the second half of 2002, and many producers initiated expansions in late 2002 and early 2003. Given the typical 12-18 month lead time required for new carbon black units, these new units began to come on-stream in late 2003 and continued throughout 2004, according to the study.

Major expansions in 2004 included Bridgestone and Tokai in Thailand; Phillips Carbon Black, Continental Carbon and Hi-Tech Carbon in India; Alexandria Carbon Black in Egypt; and Cabot, China Synthetic Rubber and Degussa in China. Significant expansions currently in the works include Cabot and Degussa in Brazil; Cabot, Tokai and Birla in China; Phillips Carbon Black in India; and Thai Carbon Black in Thailand. Also, the Japanese industry is seeing a major restructuring as Tokai Carbon and Mitsubishi Chemical, the two largest producers, are combining their carbon black businesses into a new joint venture that is expected to be operational in April 2005. The new company will control nearly 50% of Japanese capacity, as well as majority ownership of a plant in Thailand.

The 440-page study, Carbon Black World Data Book 2004, is a multi-client market research report that provides a comprehensive overview of the global carbon black industry. The report, containing 230 tables and figures, focuses on supply and demand issues, including capacity, utilization, production, foreign trade and major markets, is published annually by Notch Consulting Group, Amherst, MA.

World carbon black demand

Item                     2003    2004     2010   CAGR
                                                 03-10

Market value (mil. $)   5,680   5,780    8,050    5.1%
Average value ($/kg)     0.72    0.71     0.80    1.5%
Market volume           7,915   8,138   10,100    3.5%
  (000 metric tons)

2004 is projected; CAGR - compound annual growth rate

Carbon black demand by region (2004)

Europe          25%
China           15%
Japan           11%
Other Asia      18%
Rest of world    8%
NAFTA           23%

Note: Table made from pie chart.