World CB demand to reach 8.6 mmt in 2006. (Market Focus).

The global carbon black market is forecast to rise 3.5% per year through 2006 to 8.6 million metric tons, according to a new study from The Freedonia Group, Inc.

The vast majority of carbon black is used as a reinforcement in vulcanized rubber goods, including more than two-thirds for tires alone. However, carbon black demand from the tire sector is projected to increase at a below-average 2.8% per year through 2006. On the other hand, the smaller non-tire carbon black market will expand at a much stronger 5.2% per year through 2006, a significant recovery from the poor performance of the past decade, says the study "World Carbon Black."

Special blacks will also offer strong gains, although increasing from a relatively low base. While special blacks are a minor segment of the overall carbon black market as measured in tonnage, they command considerably higher per-kilogram prices 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.

The North American carbon black market, dominated by the U.S., will expand at a pace approaching the global average. Slow growth in other developed parts of the world such as Western Europe and Japan will be more than offset by robust expansions in the carbon black markets of developing regions. The large markets of China and India will post particularly impressive gains due to ongoing development of their respective motor vehicle and tire industries. Eastern Europe and Latin America will also post above average gains in line with ongoing industrial development. Japan will maintain one of the world's largest markets for carbon black, although demand will grow at a pace below the global average due to weakness in the country's motor vehicle and rubber industries. Western Europe will hold by far the slowest growth prospects among all major regions, primarily as a result of a stagnant motor vehicle industry.

In 2002, the global carbon black industry saw a number of crucial developments. Among these, the most significant is an ongoing investigation of alleged price fixing that began in Western Europe and has since spread to the U.S. The rubber chemicals industry has also undergone such investigations, and there are strong indications that other rubber-related sectors could be next. In 2002, the European government also began an investigation into the alleged dumping of carbon black into the European market by Alexandria Carbon Black (Egypt) and a number of Russian producers.

Tread shipments rebound

The Rubber Manufacturers Association reported that a first half decline in tread rubber shipments was offset by growth in the second half of 2002, resulting in a less than 1% decline in shipments from the previous year.

The RMA said shipments in 2002 resulted in 16.26 million tires produced in the U.S. The group expects this number to increase at an average rate of 2.1% per year through 2004.

Rubber growth at 4.4%

The International Rubber Study Group said worldwide consumption of rubber increased by 4.4% in March. Since reaching a low point of 17.2 million metric tons in March of 2002, consumption has risen steadily. It reached 17.86 mmt at the end of the year, and the March figures are 17.95 mmt.

Table 1-world carbon black demand

                                                        % annual
                                                          growth

                               1996    2001    2006   01/96   06/01

World carbon black demand     6,450   7,270   8,620    2.4     3.5
  Tires and tire components   4,333   4,940   5,670    2.7     2.8
  Non-tire rubber products    1,698   1,850   2,380    1.7     5.2
  Special blacks                419     480     570    2.8     3.5

(Thousand metric tons)