Carbon black is well renowned as world’s best reinforcing material for rubber related products which also finds application as a key raw material in various chemical industries including inks, paints, batteries, etc. The global tyre manufacturers consume nearly 80 % of the total carbon black demand. The recent changes in global carbon black industry indicate that most of the carbon black’s manufacturing units in western world including North America, Europe are being forced to shut down their operations because of the heavy competition they are facing from low cost Asian manufacturers. This has resulted in shift of carbon black’s manufacturing capacities towards Asia, fuelling the growth of new manufacturing capacities especially in China and India.
The Indian carbon black market bears a huge potential to continue accelerating its growth and generating huge revenues during this decade. The performance of the market has been excelled very rapidly in recent times, which is projected to continue by the end of 2017 when India will comprise total installed capacity of nearly 1,184,000 tonnes, remarking an overall growth of nearly 136 percent.Current world demand for carbon black is estimated to be 10.4 million tonnes a year against an installed capacity of 14.26 million tonnes, indicating supply is outstripping demand. According to industry sources, global carbon black capacity is expected to grow at a compounded annual growth rate (CAGR) of 3.3% between 2011 and 2015 even as demand is expected to grow at a CAGR of 5.5%.
Growing demand in India
The demand for carbon black is going up in India, due to the steady rise in automobile sales and its direct correlation with the tyre industry. The Indian carbon black industry has more than enough capacity to meet the country’s domestic demand and in fact is a net exporter of carbon black.
Almost all major customers in the tyre segment have either announced or undertaken major greenfield/brownfield expansion projects which are expected to start commercial production during the next 12 to 18 months. A couple of global tyre majors have also announced plans to initiate manufacturing facilities in India.
Further, automobile companies are developing smaller cars for the domestic as well as the overseas markets, which may see India emerge as an export hub for smaller cars, resulting in an exponential demand growth for tyres and carbon black after three to five years. With a brisk pick-up in the tyre sector, demand for carbon black is expected to increase 8% to 10% per annum in the domestic market.
Indian Firms on Expansion Mode
The carbon black industry in India is in the midst of a major expansion, with new plants recently completed, or under construction, or planned by big names in the industry like Himadri, Phillips Carbon Black, Hi-Tech Carbon, and Continental Carbon India.
PCBL is setting up Vietnam’s first carbon black plant through its joint venture in two phases. The carbon black manufacturing capacity in the first phase will be 55,000 MT at a total outlay of $ 63 million, which is expected to be commissioned in 2012. Thanks to the recent scorching pace of growth of India’s economy, PCB has earned the distinction of being the second-fastest growing carbon black company in the world. Its five-year compounded annual growth rate (CAGR).
Through its organic and inorganic growth, the Indian carbon black industry is set to be a top global player in the near future.
