Carbon black production to increase 3.1%.

World carbon black production is forecast to have increased 3.1% in 2003, according to a study by Notch Consulting Group. NCG says production this year will total 7.8 million metric tons after reaching 7.6 mmt in 2002. The 2003 figure is 6% higher than the weak performance of 2001.

Global carbon black capacity is expected to reach 8.94 mint this year, up by nearly 180,000 mt/y from 2001, according to Notch. Global utilization rates rose to 86.1% in 2002, and are forecast to exceed 87% in 2003, despite the additional capacity as production levels benefit from a more favorable demand environment.

Major expansions in the 2002-2003 period included: Degussa in Brazil; Cabot in the Czech Republic; China Synthetic Rubber in China; and Continental Carbon in India (by the end of 2003). However, these expansions have been partially offset by a number of plant closures including: Degussa Engineered Carbons and Columbian Chemicals in the U.S.; Degussa in France; and Cabot in Spain (scheduled for the end of 2003). Looking forward, major expansions are planned for 2004-2005 by Bridgestone in Thailand; China Synthetic Rubber and Cabot in China; and Hi-Tech Carbon in India.

Notch says that these trends suggest there will be a continued migration of capacity from high cost regions, particularly in the European Union, toward lower cost regions, primarily Asia, as well as Eastern Europe, Latin America and Africa. This shift may be accelerated by the recent defeat of an antidumping measure in the EU. The complaint, initiated by Cefic (a chemical industry council) on behalf of Cabot, Columbian Chemicals and Degussa, had petitioned the European Commission to levy antidumping duties against low cost carbon black imports from Egypt and Russia. In March 2003, the EU announced it would not impose the duties as the proposal had failed to gain majority support from the EU's 15 members within the 15 month time span allowed. Immediately following the decision, Cabot announced that it would close its plant in Spain, while Degussa had idled some of its capacity in France as the investigation was being conducted.

Other significant recent developments in the industry include an investigation of alleged price fixing in carbon black, which was initiated in November 2002 by the U.S. Department of Justice, the European Commission and the Canadian Competition Bureau. Degussa, Degussa Engineered Carbons, Cabot and Columbian Chemicals have confirmed that they are cooperating with authorities in the investigation. The carbon black case is related to similar probes into rubber chemicals and EPDM rubber which remain ongoing.

Global carbon black capacity,
production, utilization

                 2001      2002    2003f

Capacity        8,765     8,792     8943
Utilization     84.1%     86.1%    87.2%
Production      7,373     7,567     7800

000 metric tons

Source: Notch Consulting

Wworld carbon black production, 2003

NAFTA         25%
All            9%
others *
Other Asia    18%
Japan         10%
China         12%
Central/      11%
Eastern
Europe

Note: Table made from pie chart.