Carbon Black Global Outlook The Year in Carbon Black 2017 - Mr_ Paul... · Sources: Historical data: IRSG, Singapore; RMA, Washington DC, ... Thailand OTR 615 2015-2019 ... 200 2019-2020

1 Notch: Carbon Black Global Outlook

Carbon Black Global Outlook

The Year in Carbon Black 2017

Carbon Black 2017 Perspective in Asia Pacific

Chennai, India November 7-9, 2017

R2


About Notch Consulting

Founded in 2000, Notch Consulting, Inc. (Amherst, MA) focuses on supply and

demand for raw materials used in the global tire industry

Publishes the Carbon Black World Data Book, the most widely read and

authoritative report available on the carbon black industry

Also publishes widely read multi-client reports on precipitated silica, rubber

chemicals (antioxidants, accelerators, specialty additives), tackifiers, insoluble

sulfur, and related rubber compounding materials


Macro Drivers Capacity & Production Trade Demand

Rubber Consumption Forecast

4

Sources: Historical data: IRSG, Singapore; RMA, Washington DC, China Rubber Industry Association, Beijing, China; JATMA, Tokyo, Japan; governmental agencies; Forecasts: Notch

Notch: Carbon Black Global Outlook

Region

2006

2016

2021 f

% AGR 2006-2016

% AGR 2016-2021

Rubber Consumption (000 tons) 21,692 27,281 31,733 2.3% 3.1%

Tire Markets 13,313 17,242 20,182 2.6% 3.2%

Non-tire Markets 8,379 10,039 11,551 1.8% 2.8%

Advanced Economies 10,462 9,473 10,410 -1.0% 1.9%

Developing Economies 11,230 17,808 21,323 4.7% 3.7%

Global Tire Industry Investment in New Capacity, 2016-2021


$22 billion in total investments

North America, 27%

South America, 1%

Europe, 17%

Af/ME, 9%

Asia excl. China, 27%

China, 19%

Sources: press releases, trade journals, company contacts; Note: For multi-year projects that began before 2016 or will extend beyond 2021, Notch has prorated the entire investment to include only the 2016-2021 period based on our best estimates; Projects current as of October 2017

Asia excluding China – Tire Industry Investment in New Capacity, 2016-2021


$5.9 billion in total investments

Thailand 29%

India 22%

Vietnam 19%

Indonesia 9%

Bangladesh 6%

Korea 5%

Taiwan 5% Others

5%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Sources: press releases, trade journals, company contacts; Note: For multi-year projects that began before 2016 or will extend beyond 2021, Notch has prorated the entire investment to include only the 2016-2021 period based on our best estimates; Projects current as of October 2017

Asia excluding China – Tire Plant Expansion Activity

Company

Location

Tire Types

Total Budget (mil $)

Start Up/

Ramp Up

Jamuna Group Habiganj district, Bangladesh PC, truck 267 2018-2020

Apollo Tyres Chennai, India Truck 245 2016-2018

Bridgestone Pune & Indore, India PC 304 2017-2022

Cheng Shin Ahmedabad, Gujarat, India 2-wheeler 400 2017-2018

Goodyear Aurangabad, India PC/LT 115 2017-2019

Cheng Shin Jakarta, Indonesia Motorcycle 320 2017-2019

Hankook Cikarang, West Java, Indonesia PC/LT 711 2013-2016

Toyo Perak, Malaysia PC 188 ~2019-2020

Yokohama Clark SEZ, Philippines PC/LT 118 2013-2016

Nexen Tire Changnyeong, Korea PC/LT 1,000 2012-2017

Federal Guanyin, Taoyuan, Taiwan PC/LT 300 2017-2020

Bridgestone Rayong, Thailand OTR 615 2015-2019

Bridgestone Thailand (2 locations, not announced)

Aircraft 150 2019

Continental Rayong, Thailand PC/LT 265 2019-2022

Goodyear Bangkok, Thailand Aircraft 162 2018 Sources: trade press & company announcements; excludes projects below $100M 7 Bold = new plant Notch: Carbon Black Global Outlook

Asia excluding China – Tire Plant Expansion Activity, cont.

Company

Location

Tire Types

Total Budget (mil $)

Start Up/

Ramp Up

Double Coin Rayong, Thailand Truck, OTR 295 2017-2020

Sentury Tire Bangkok, Thailand PC/LT 400 2015-2016

Shandong Linglong

Chonburi, Rayong, Thailand PC/LT, truck 120 2019-2020

Sumitomo Amata, Rayong, Thailand Ag, motorcycle

126 2014-2017

Zhongce Rubber Rayong, Thailand PC, truck 164 2015-2017

Bridgestone Hai Phong City, Vietnam PC 425 2017

Casumina Bin Duong Province, Vietnam PC/LT 160 2013-2017

Kenda Rubber Dong Nai Province, Vietnam PC/LT 160 2017-2019

Sailun Tay Ninh Province, Vietnam Truck, bus OTR

200 2019-2020

8 Bold = new plant Notch: Carbon Black Global Outlook Sources: trade press & company announcements; excludes projects below $100M



World Carbon Black Capacity, Production & Utilization, 2006 to 2017

10 Sources: Notch proprietary data


70%

72%

74%

76%

78%

80%

82%

84%

86%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

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20

14

20

15

20

16

20

17

f

Production (left axis) Capacity (left axis) Utilization (right axis)

00

0 t

on

s

World Carbon Black Annual Production Growth

11 Notch: Carbon Black Global Outlook Sources: Notch proprietary data

6.0%

0.6%

3.5% 3.5%

0.5% 0.9%

3.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

20

11

20

12

20

13

20

14

20

15

20

16

20

17

f

Sequential annual growth in production volumes

World Carbon Black Capacity – Net Change by Year



-300

-200

-100

0

100

200

300

400

500

600

700

800

900

1,000

20

04

20

05

20

06

20

07

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08

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f

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f

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Carbon Black Capacity – Major Recent Projects



-300 -200 -100

0 100 200 300 400 500 600 700 800 900

1,000

20

04

20

05

20

06

20

07

20

08

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09

20

10

20

11

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12

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13

20

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16

20

17

f

20

18

f

2016 Additions (330 KT): Black Cat – China Birla Carbon – China NSCC Carbon – China OCI – China Omsk – Russia Removals (291 KT): Birla – Egypt & Germany Cabot – Indonesia Orion – France Tokai – China & Japan

2017 Additions (46 KT): Abu Dhabi Oil Refining – UAE Orion – Sweden Removals (260 KT): Daguangming Mining – China Hongte Coal Chemical – China

2018 Additions (374 KT): Birla – China OCI & Hyundai Oilbank – Korea Omsk – Belarus PCBL – India Removals (79 KT): Orion – US (line idled) Orion – Korea

How Much Capacity Will Be Needed by 2021?

14 Source: Notch proprietary data

Based on projected growth of 3.8%/year from 2016, carbon black production is forecast to reach 14.8M tons by 2021

The highest global utilization rate observed over the last 20 years was 85% to 86% in 2004 and 2005 (the lowest rate was 71% in 2009).

Assuming utilization of 85%-86%, the industry will require 17.3M tons/year of nameplate capacity by 2021

Capacity declined in 2017 by ~215 KTPY so the industry will require an increase of 1.8M tons/year from year-end 2017 to year-end 2021 This means roughly 450 KTPY of new capacity every year from 2018 through 2021

Major expansions are planned by Birla Carbon (China); Black Cat (China); Himadri Specialty Chemicals (India); Ningxia Dadi (China); OCI/HDO (Korea); Omsk Carbon Group (Belarus); Phillips Carbon Black (India); and Balkrishna Industries (new producer - India) – total of these expansions: ~750 KTPY

Announced expansions are no where close to expected requirements Suppliers have indicated that current pricing levels do not support reinvestment EPA issues remain a concern in the United States – possible plant closures China’s current environmental crackdown raises serious concerns both for current

capacity and future additions

Conclusion: Supplies will become much tighter going forward – especially in the US and EU


World Carbon Black Capacity, Production & Utilization Forecast



77%

79%

81%

83%

85%

87%

8,000

10,000

12,000

14,000

16,000

18,000

20

15

20

16

20

17

f

20

18

f

20

19

f

20

20

f

20

21

f

Production (left axis) Capacity (left axis) Utilization (right axis)

00

0 t

on

s

Capacity: 2%/year – 2016 to 2021 Production: 3.8%/year

Notch: Carbon Black Global Outlook 16

Carbon Black Capacity by Company, Year-end 2016

Sources: company information & Notch estimates; Note: excludes thermal blacks

Unit: KTPY

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200



Leading Carbon Black Exporters

18

0 50

100 150 200 250 300 350 400 450 500 550 600 650 700 750 800

00

0 t

on

s

2015

2016

2017 f

Sources: national statistical offices; Global Trade Atlas; Eurostat. For 2017 estimates, China and Korea are based on 9 months of data; Canada, all EU, Russia, and US are 8 mos.; India is 7 mos.; Egypt is 6 mos.


Ranked by 2016 exports

Leading Carbon Black Exporters – excluding China & Russia

19

0

50

100

150

200 0

00

to

ns

2015

2016

2017 f

Sources: national statistical offices; Global Trade Atlas; Eurostat. For 2017 estimates, Korea is based on 9 months of data; Canada, all EU, and US are 8 mos.; India is 7 mos.; Egypt is 6 mos.


Ranked by 2016 exports

China & Russia: Annual Carbon Black Exports


0

100

200

300

400

500

600

700

800

900

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

f

China Russia

00

0 t

on

s

Source: Global Trade Atlas, GTIS; China National Chemical Information Center; Exports for 2017 are estimated based on 9 mos. of data for China and 8 mos. for Russia


China & Russia: Carbon Black Exports by Destination, 2016

Thailand, 26%

Indonesia, 18%

Japan, 9%

Vietnam, 9%

India, 8% Taiwan, 7%

Malaysia, 5%

Korea, 4%

Others, 14%

China: 734.2 KT

Source: Global Trade Atlas, GTIS; China National Chemical Information Center

Poland, 32%

Hungary, 15%

Germany, 10%

Turkey, 7%

Slovakia, 5%

Serbia, 5%

Czech R, 4% US, 4%

Belarus, 3%

Others, 15%

Russia: 612.8 KT


Carbon Black Export Values for Leading Exporters U

S$ p

er k

ilogr

am

0.40

0.60

0.80

1.00

1.20

1.40 Ju

n-1

3

Au

g-1

3

Oct

-13

Dec

-13

Feb

-14

Ap

r-1

4

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Korea Thailand India Russia China

Source: Global Trade Atlas, GTIS; China National Chemical Information Center; Korea International Trade Association

Cost Comparison of Carbon Black Feedstocks in Asia

Source: Vince Guercio, CTC International

225

275

325

375

425

475

525

575

625

675

HSFO 180 (Singapore) Gulf Coast HS CBO (CIF SE Asia)

Anthracene Oil (China) Raw Coal Tar (China)

US$

per

to

n


China’s Environmental Crackdown

24 Source: media reports & industry contacts

China’s industrial sector has been roiled by a series of environmental inspections by the Ministry of Environmental Protection (MEP) All sectors have been affected: mining, energy, chemicals, manufacturing

These “green inspections” have led to plant closures, substantial fines, price hikes, and spot shortages of key materials

The national inspection program began in late 2015 with a pilot program in Hebei province. The MEP began a rollout of inspections for all of China’s remaining 30 provinces in four

rounds as follows: Round 1 (July/August 2016): Heilongjiang, Inner Mongolia, Ningxia, Henan, Jiangsu,

Jianxi, Yunnan, Guangxi Round 2 (Nov/Dec 2016): Beijing, Gansu, Shaanxi, Hubei, Shanghai, Chongqing,

Guangdong Round 3 (April/May 2017): Liaoning, Tianjin, Shanxi, Anhui, Hunan, Guizhou, Fujian Round 4 (Aug/Sept 2017): Xinjiang, Jilin, Qinghai, Shandong, Tibet, Sichuan, Zhejiang,

Hainan This program concluded on September 15, 2017. According to the MEP:

135,000 reports were received during inspections; 104,000 cases were handed to local governments, and 102,000 of these cases have been resolved

As of 9/17, about 18,000 companies have been punished, with fines totaling RMB 870M (US$131M).

Fines were heaviest in Henan, Shanxi, and Hunan provinces, but all were affected More than 12,000 local and provincial officials have been punished


China’s Environmental Crackdown, continued

25 Source: media reports & industry contacts

However, the MEP’s inspection program is only part of the story

For the first time, the MEP’s central inspection teams cannot be avoided and they are holding local government officials directly responsible for violations in their areas These violations can lead to serious repercussions – fines, firing, even arrest

In response, local authorities have shut down factories prior to inspections to avoid problems In some cases, these local shut downs have been implemented without warning and with

no indication of how long the shut down will last Mandatory shut downs of 60 days are not uncommon Local shut downs are not necessarily related to non-compliance or violations but are

panic moves by local authorities seeking to avoid a black mark in their record Effects of the crackdown on the carbon black industry:

Shut down of some coking plants has caused feedstock shortages Some smaller carbon black plants have been shut down, while some larger plants have

been forced to produce at lower operating rates These developments are favoring the industry’s larger players, particularly those with

state-of-the-art environmental controls Conclusion: The inspection regimen is here to stay:

The MEP plans to implement a new round of random inspections in major areas and industries beginning in late 2017 or early 2018

The 19th National Congress of the Communist Party of China (Oct 18-24, 2017) made “green development” a key plank of its next five year plan


Leading Carbon Black Importers

26

0

50

100

150

200

250

300 0

00

to

ns

2015

2016

2017 f

Sources: national statistical offices; Global Trade Atlas; Eurostat. For 2017 estimates, Thailand is based on 9 months of data; EU, Japan, Turkey, and US are 8 mos.; India is 7 mos.; Indonesia is 6 mos.




Largest Percentage Gains by Country – 1H 2017


Carbon Black Demand, 1H 2016 versus 1H 2017

Item

1H 2016 (KT)

1H 2017 (KT)

Volume increase (KT)

Percent Increase

World Total 6,265 6,545 280 4.5%

Hungary 24 33 9 35.4%

Vietnam 56 71 15 26.6%

Belgium/Lux 52 62 10 20.4%

Portugal 17 20 3 19.7%

Romania 37 43 6 17.1%

Finland 8 9 1 16.9%

Thailand 223 252 29 12.8%

Russia 130 145 15 11.5%

Taiwan 70 78 8 11.4%

Slovakia 47 52 5 10.6%

Sources: Imports; Notch proprietary data (preliminary)

Largest Gains in Volume by Country – 1H 2017


Carbon Black Demand, 1H 2016 versus 1H 2017

Item

1H 2016 (KT)

1H 2017 (KT)


Percent Increase

World Total 6,265 6,545 280 4.5%

China 2,183 2,336 153 7.0%

Thailand 223 252 29 12.8%

Russia 130 145 15 11.5%

Vietnam 56 71 15 26.6%

India 393 404 11 2.8%

United States 747 757 10 1.3%

Belgium/Lux 52 62 10 20.4%

Hungary 24 33 9 35.4%

Taiwan 70 78 8 11.4%

Japan 329 337 8 2.4%

Sources: Notch proprietary data (preliminary)

Largest Percentage Gains by Country – 2016 to 2021


Carbon Black Demand Forecast, 2016 to 2021

Item

2016 (KT)

2021 (KT)


Percent Increase

World Total 12,579 14,750 2,171 3.2%

Hungary 48 80 32 10.8%

Egypt 24 37 13 9.0%

Sri Lanka 49 72 23 8.2%

Vietnam 116 170 54 7.9%

Serbia 42 55 13 5.5%

Turkey 187 235 48 4.7%

Thailand 473 590 117 4.5%

Romania 77 96 19 4.5%

Slovakia 91 114 23 4.5%

Argentina 47 58 11 4.3%

Sources: Notch proprietary data

Largest Gains in Volume by Country – 2016 to 2021


Carbon Black Demand Forecast, 2016 to 2021

Item

2016 (KT)

2021 (KT)


Percent Increase

World Total 12,579 14,750 2,171 3.2%

China 4,416 5,400 984 4.1%

United States 1,490 1,670 180 2.3%

India 795 975 180 4.2%

Thailand 473 590 117 4.5%

Indonesia 360 430 70 3.6%

Brazil 466 524 58 2.4%

Russia 279 335 56 3.7%

Vietnam 116 170 54 7.9%

Turkey 187 235 48 4.7%

Korea 444 485 41 1.8%

Sources: Notch proprietary data

நன்றி Thank you!

Questions?

Contact: Paul Ita [email protected]


Web: www.notchconsulting.com

Blog: www.notchconsulting.wordpress.com

Contact: [email protected]

Documents

Carbon Black Global Outlook The Year in Carbon Black 2017 - Mr_ Paul... · Sources: Historical data: IRSG, Singapore; RMA, Washington DC, ... Thailand OTR 615 2015-2019 ... 200 2019-2020