Tyres and rubber products represent the major end-use applications, accounting for about 90% of global carbon black market, as per Global Industry Analysts Inc. Developing economies in Asia Pacific, Middle East/Africa and Latin America will emerge as the largest and the most lucrative markets in the upcoming years. Increasing level of disposable personal income in these regions is expected to generate healthy demand for automobiles and other consumer applications, translating into higher demand. Asia-Pacific represents the largest market for carbon black in the world, with a strong hold of 37% share. Developed economies such as the US and Western Europe are expected to display flat demand though use of specialty blacks is likely to pick up fastest in these regions. Consumption of carbon black in tyres is expected to grow at a compounded annual rate of 3.6% during 2001-2010. The US market for carbon black is estimated at about 1.6 mln metric tons. The virgin carbon black industry is likely to come under increased pressure from governments and environmental groups, as this product is a significant greenhouse gas emitter. Demand for carbon black in paints, coatings and inks are expected to show an increase over the next five years. Demand for non-rubber applications that mainly use specialty blacks will display significant increase. Plastic and printing inks are likely to account for significant share of specialty black demand. Another emerging application area for specialty carbon black is metallurgy. Moreover, as special blacks command higher price than the widely used furnace blacks, they offer higher margins to suppliers. Furthermore, the demand for special blacks is not influenced by the cyclicality in the rubber and motor vehicle industries. Silica and other silanes are expected to offer a serious challenge to carbon black in the future and are fast emerging as major substitutes to carbon black due to better performance and environmental friendly nature. These products reduce rolling resistance in tyres at the same time improve fuel efficiency, hence they are increasingly finding usage in tyres market. Some of the OEM green tyres already use silica to the tune of 65% by weight. Automotive industry is a significant contributor to global economic activity. Vast size of the industry has a serious impact on diverse industries and sectors, both upstream and downstream. The automobile industry has been witnessing establishment of new manufacturing facilities, especially in China, South America and Central Europe, as major manufacturers seek new destinations to set up plants and take advantage of local operations. The moving production landscape ultimately resulted in increasing globalization of carbon black producers. Key players dominating the global Carbon Black market include Aditya Birla Group/Aditya Birla Nuvo Ltd, Alexandria Carbon Black Company SAE, Cabot Corporation, Cancarb Limited, China Synthetic Rubber Corporation, Columbian Chemicals Company, Continental Carbon Company, Evonik Degussa GmbH, Degussa Engineered Carbons LP, Evonik Degussa (China) Co. Ltd., Korea Carbon Black Co. Ltd. Mitsubishi Chemical Corporation, Philips Carbon Black Ltd., Senka Carbon Private Ltd., Sid Richardson Carbon & Energy Co., Sosnogorsk Gas Processing Works, Thai Tokai Carbon Product Co. Ltd., and Tokai Carbon Co. Ltd.
European Markets for Carbon Black reveals that these markets earned revenues of €1178.8 mln in 2006 and estimates this to reach €1938 mln in 2013, as per Frost & Sullivan. Tyre manufacturing segment is the largest consumer of carbon black, accounting for almost 65% of the total European market. Steady demand from key end-user industries continues to provide sustainable business options for active carbon black manufacturers. Growth in automobile demand and the subsequent increase in tyre manufacturing provide reasonable scope for increase in volume consumption, while specialty applications are likely to yield higher profit margins. Carbon black manufacturers in Europe are gearing up to meet one of their biggest challenges as key end-user industries of this material increasingly shift their production facilities from Western Europe to the comparatively low-cost Central and Eastern Europe (CEE) region. The task of transporting carbon black from existing manufacturing plants in Western Europe to end users' facilities in Eastern Europe is both expensive and uneconomical, creating enormous difficulties for manufacturers. Hence, carbon black manufacturers are under increasing pressure to maintain a presence in these regions. This is driving some of them to invest in the CEE regions to continue supplying to existing key clients while attracting new business as per Frost & Sullivan. Shifting to low-cost regions or investing in new facilities could give manufacturers a strong advantage in terms of proximity to key markets, helping them target existing and emerging markets. Such a move could also provide logistical benefits in terms of enabling them to identify new markets to cater to in the future. However, this may be feasible for larger and well-established participants, but smaller companies will find it difficult to compete under such conditions. Shifting to low-cost regions may bring short term benefits, but carbon black manufacturers are likely to continue to depend on Western European countries for majority of their business. Stable demand from end-user industries, especially tyre manufacturers, will continue to sustain market growth. However, rising prices of crude oil derivatives present a major challenge since carbon black production is highly dependent on these raw materials. Increasing prices have not only affected the distribution chain, but has also eaten into manufacturers' potential for profits, obliging them to adopt cost-cutting strategies to sustain business. Investment in new technology, minimizing distribution costs and early identification of key specialty application markets can help carbon black manufacturers compete at sustainable levels. Reducing dependence on a few end users by widening their product portfolios may also provide an advantage over competitors. Asia/Pacific region, excluding Japan, will post the strongest gains in carbon black demand through 2013. The large markets of China and India will post particularly impressive gains due to a continuing rapid expansion in their respective motor vehicle and tyre industries that will be driven by robust economic growth in both nations. China and India saw the largest increases in new carbon black capacity among all countries of the world over the 2003 to 2008 period, a trend that will continue through 2013. Demand for carbon black in the developed parts of the world will continue to post below-average gains through 2013, with the large US and Japanese markets holding particularly weak prospects. Carbon black demand in Western Europe will recover from recent declines, but growth will continue to significantly lag the global average.
Carbon black capacity utilization rates dropped significantly in developed countries in 2008 due to economic slowdown and/or recession. This situation was especially dire in USA, where capacity utilization rates fell below 70%, resulting in several carbon black plants being closed or mothballed. Through 2013, the US and Western Europe will see capacity reductions and consequently, an expansion in utilization rates. North America and Western Europe, which combined produced 48% of the world's carbon black in 1998, will account for just 23% of global output in 2013. Conversely, the Asia/ Pacific region, which produced 36% of the world's carbon black in 1998, will account for a 57% share in 2013.
According to a Freedonia study, world carbon black demand is forecast to rise 4.3% pa through 2013 to 11.6 mln metric tons, bolstered by a healthy global rubber market over the same period. Gains will be exaggerated to some extent by the fact that growth will be rising off a relatively weak 2008 base, when a significant part of the world saw the beginnings of recession. The vast majority of carbon black finds use as reinforcement material in vulcanized rubber goods, including over 60% in motor vehicle tyres alone. Carbon black demand from the tyre sector is projected to increase 3.7% pa through 2013 to 6.9 mln metric tons. The non-tyre rubber carbon black market will expand 4.8% pa through 2013 to 3.6 mln metric tons. The market for special blacks will advance a strong 5.9% pa to 1.2 mln metric tons. While special blacks comprise less than 10% of the overall global carbon black market on a tonnage basis, they command considerably higher per kilogram prices than commodity furnace blacks. Carbon black manufacturers will continue to spend a disproportionate portion of their research and development budget on the special blacks sector. In addition to higher margins, a strong position in special blacks offers suppliers greater protection from cyclicality in the highly interconnected rubber, tyre and motor vehicle industries. Although demand for special blacks will remain concentrated in the plastics, inks and paints sectors, other uses such as conductive fillers will hold the best growth prospects through 2013.
As per SRI Consulting, there is a continuing long-term trend toward concentration and consolidation among suppliers of carbon black. Petroleum companies have exited the business, which is now dominated by chemical companies for whom carbon black is a core product. All major producers are global in the scope of their operations. The four largest producers are Cabot Corporation, Evonik Industries (formerly Degussa AG), Columbian Chemicals, and China Synthetic Rubber Corp. The leading application for carbon black is as a reinforcing agent in the production of rubber goods, accounting for more than 90% of total carbon black consumption. In 2007 use in tyres accounted for 72% of world consumption, with other rubber goods (hoses, belts, etc.) accounting for an additional 20%; consumption for non rubber goods (plastics, inks, paints, etc.) accounted for the remaining 8% of world consumption. While specialty carbon blacks account for only 8% of the total market in tonnage, they command a significantly higher selling price than commodity furnace black, and thus will be the focus of future research and development activities. The growth of carbon black is closely tied to the automotive industry and the production of tyres. With the global automobile industry moving east to China, India and Eastern Europe, the tyre industry has followed, and with it the carbon black producers. (The availability of natural rubber in Southeast Asia is also a factor in the tyre industry’s investment pattern.) As stringent environmental laws are forcing the closure of some older carbon black capacity in developed regions, much of the future investment is taking place in developing economies. The following pie chart shows world consumption of carbon black:
The price of crude oil has an overriding influence on carbon black markets by affecting such factors as the cost of carbon black, type of vehicles sold and total miles driven, and even tyre design (high performance tyres, super-abrasion-resistant tread stock and the “green” tyre). A major issue facing the carbon black industry is the cost of carbon black feedstock, which is tied to the price of oil. The feedstocks for carbon black production are generally viscous aromatic hydrocarbons consisting of branched polynuclear aromatics with smaller quantities of paraffinic and unsaturated chemicals. These oils are often by-products of refinery and petrochemical operations and have the lowest energy of cracking, providing the highest yields.