A change in ownership of a carbon black company shows the increasing importance of Asia and, in particular, India, to the global rubber industry.
Aditya Birla Group's agreement to buy Columbian Chemicals Co. will make a carbon black giant that much larger. The Indian company ranks as the world's fourth-largest black producer, and Columbian is the third biggest.
The up-and-coming power in this supply field may not be done yet.
Evonik Industries A.G. has been shopping its carbon black business—the former Degussa operations—since September. There is much speculation about where the No. 2 carbon black business will end up, and Aditya Birla is considered a candidate.
It's no surprise India is a player in the carbon black field. Tire manufacturers are the major customers of the material, and India is a growing force in the global industry. Apollo Tyres, MRF and J.K. Tyres and several other firms are among the world's 100 largest tire makers.
Additionally, Aditya Birla and Columbian definitely are global players, as are their top competitors, No. 1 Cabot Corp. and Evonik. Aditya Birla has six plants in four countries—Columbian, 11 facilities in nine nations.
That's what's needed to serve a very global market. It's no coincidence that these companies' competitors have been adding capacity in Asia, too, where the largest tire growth is occurring.
What does this all mean for the North American carbon black sector?
Don't look for any big investment in capacity expansion on the continent. Money will be spent to keep the operations up-to-date, but that's about it. It's just not needed.
Also, air quality standards are much more stringent here than in other regions of the world. That's an added cost to producing carbon black, and another factor in limiting capacity increases.
If something does happen involving an American-based carbon black producer, odds are it would involve Cabot, the 900-pound gorilla in the business. It might want to add some weight via the Evonik auction.