Tyre Asia April/May 2018 29
It appears that the ever-tightening rules as
well as the US settlements have limited the
enthusiasm in those majors to add capacity
anywhere in the world.
Although trendline growth would have
needed an extra 1200kt, actual demand
growth in the tire industry has been stronger
than that.
Anecdotally, many suppliers to the tire
industry have reported that demand for their
materials was up strongly in 2017 and 2018,
and in all regions of the world, leading to
tight supply in many different materials.
That is the global picture. Up to about 2016,
the global supply-demand situation for
carbon black was balanced, or slightly in
over-supply. As we move into the middle of
2018, the world carbon black supply-demand
balance is getting tight. Toward the end of
this year, and into 2019, that tightness is
likely to move to shortages and allocations.
Indian situation
However, there are more local difficulties,
such as the one being experienced in India
today.
It seems that there is more going on than
meets the eye. Some of the discussions
in Chengdu highlighted the extraordinary
growth in demand for carbon black among
Indian tire makers.
For example, India’s carbon black imports
have been growing very strongly in recent
months. In 2016 imports were running at
around 10kt/month. In 2017 that grew to
12.4kt/month, but in January 2018 it rocketed
to 18.6kt. At the same time, the Indian
government is placing restrictions on exports,
in a bid to ensure domestic industries have
sufficient carbon black. As a result, exports
have plunged.
Part of the reason for the increase in imports
was the forced closure in December 2017 of
Continental Carbon’s factory in Noida. That
produced some 6000t – 7000 tonnes/month.
Power and water supplies to the factory
were cut off and the factory was required to
upgrade its environmental protection, after
the factory was found to have been adding
to air pollution in the vicinity, in breach of
national air quality laws. In the five months it
has been closed, India has lost some 32,000
tonnes of production.
That factory is now coming back on stream,
and latest reports suggest that material from
the upgraded factory started reaching the
market in late April.
However, even taking into account this
reduction in domestic supply the increased
imports appear to have increased total supply
into India by some 25,000 tonnes over the last
6 months.It’s not clear where this extra material is
going. Some of it may be going to new tire
factories. Michelin is known to be increasing
the output of its under-utilised TBR factory
in Tamil Nadu, but this still does not explain
the excess.
There is a suspicion – not confirmed – that
some tire makers are over-ordering in order
to build up stocks ahead of an expected
shortage later in the year.
Meanwhile, India’s carbon black makers
are struggling to maintain supplies to their
customers. Increased deliveries to the tire
sector have diverted some manufacturing
capacity away from the non-tire customers,
and this, combined with import duties, is
putting great pressure on India’s smaller, non-
tire rubber goods makers.
Already a few carbon black suppliers have
had to put some customers on allocation.
Although there is a hope that this is a
short-term measure, there is concern in the
industry that global shortages will limit the
availability of import options, and this may
create real shortages later in the year. Today
the tire makers have enough material, but
eventually, even the tire makers may face
restrictions on deliveries of carbon black.* David Shaw is the founder CEO of
UK-based Tire Industry research