World CB market growing 3.6%.

Following a depressed market situation in 1993, global carbon black consumption is forecast to increase 3.6% annually to a volume of 7.2 million metric tons in 1998, according to a recently published study by the Freedonia Group of Cleveland, OH. Rubber applications will account for 93% of the total, including 61% for tires, despite ongoing attempts by producers to reduce dependence on the highly cyclical automotive market.

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Table 1 - world demand for carbon black (thousand metric tons)

                                                 % Annual
                                                  growth
Item                 1983      1993      1998   93/83    98/93
World CB demand     4,934     5,978     7,150     1.9      3.6
 Tires              3,092     3,763     4,386     2.0      3.1
 Non-tire rubber    1,532     1,809     2,268     1.7      4.6
 Special blacks       310       406       496     2.7      4.1
World rubber
 consumption       12,396    14,344    17,225     1.5      3.7

Source: The Freedonia Group, Inc.

Growth in North America will be slower than other world markets, but will arise from a stronger base than Western Europe or Japan, which suffered weak tire and light vehicle demand in 1993. Asia/Oceania, Central and South America, and Eastern Europe will enjoy above-average demand, although the latter region will see minimal recovery after the virtual collapse of its rubber and carbon black industries.

The consumption of carbon black in tire rubber will expand 3.1% per year to reach 4.4 million metric tons in 1998. In the developing countries, this market will benefit from gains in tire and automobile production. Developed countries will see increased demand as a result of the growing popularity of performance tires, which take higher carbon black loadings relative to allseason radials. Also during this period, carbon black will face competition from precipitated silica, which is being added in greater quantities to tire treads to decrease rolling resistance and improve wet traction.

In non-tire rubber, carbon black use will increase 4.6% per annum to reach 2.3 million metric tons in 1998. Industrial rubber products (hoses, belts and mechanical rubber products) comprise the largest non-tire market. The increasing use of rubber roofing is also benefiting the non-tire segment because this product takes a high carbon black loading. Growth will be limited, however, by strong gains in thermoplastic elastomers, which use much less carbon black than the thermoset rubber parts that they are replacing.

Special black demand will expand 4.1% per year to 496,000 metric tons in 1998. Growth for this material will stem mainly from increased use in plastics, where carbon black is utilized as a colorant and to enhance UV resistance, increase strength and impart electrical conductivity. The printing ink industry will also spur demand for carbon black in products such as low rub formulations of new inks and customized grades for gloss inks.

Following the trend in the rubber and tire industries, the carbon black industry has seen considerable consolidation over the last decade. The world carbon black industry is currently dominated by Cabot, Degussa and Columbian Chemicals, which together control 40% of the world capacity of 7.9 million metric tons.