The manufacturing recession and high oil prices have stopped a major realignment of the carbon black industry in its tracks.
Despite the happy talk of politicians and economists, anyone operating in the rubber business can tell you a sizeable downturn is at work, particularly in areas connected to automotive. One of those sectors is the carbon black business. In recent months, sales of three carbon black producers have stalled. A business sector that operated as a cash cow now is considered a liability by potential buyers, victimized by the poor economy and lofty oil prices.
Columbian Chemicals Co. is the latest company to be taken off the auction block. Parent Phelps Dodge, which wants to concentrate on its mining business, said it hasn't gotten any good offers, and won't just give away the store.
A few weeks ago Degussa A.G. passed on buying Ameripol Synpol Corp.'s Engineered Carbon Inc. unit. SBR producer Ameripol Synpol is going through hard times, and now may need to restructure and find ways to cut costs.
The third failed deal occurred in February. Sid Richardson Carbon Co. ended a bid to buy thermal black producer Cancarb Ltd. and an adjacent power plant, a decision it blamed on skyrocketing natural gas prices.
A purchase by Degussa would have made one of the three giants of the fieldÃ¹Cabot Corp. and Columbian being the othersÃ¹an even bigger competitor. Sid Richardson would have gained stature and a higher-end product. And wherever Columbian ended up, it would remain a major force in the business.
Instead of change, there's status quo in the carbon black field. But it's not by choice, meaning an upheaval of some sort is bound to happen sooner or later.