CUYAHOGA FALLS, Ohio—If a shortage of carbon black becomes a reality within the next few years as some forecasters suggest, HB Chemical Inc. will be ready.
The chemical company recently became a North American distributor of carbon black produced by Jiang Xi Black Cat Carbon Black Ltd, which claims to be China's largest carbon black manufacturer, as well as the fifth largest in the world.
The initial two-year agreement, the first between the firms, began in January. HB already has distributed about 500,000 pounds of Black Cat carbon black to customers across the U.S., Canada and Mexico, and it plans to provide all grades of carbon black currently being made by the Chinese supplier.
"The talk among larger users of carbon black is that there could be a shortage from North American producers, possibly in 2014-15, because of tire capacity coming online in the tire market," said Joe Moran, regional sales manager at HB Chemical, located near Akron. "So companies are looking for alternate sources. The bigger users are more concerned right now than the rest of the market."
Moran said domestic producers don't have much ability to expand. "People are going to be looking elsewhere to fill that void," he said.
Black Cat ships its product in bulk to the West coast. From there, the carbon black is distributed either to the HB warehouse in Ak¬ron or a facility in West Virginia, where it is distributed by rail directly to a consignment location. The material belongs to HB until the mixer has a need for it.
"Just as we do with other larger mixers, the inventory goes to their facility until they use it," Moran said. "That way they don't tie up cash."
Last September, Black Cat approach¬ed Moran and HB President Jeff Rand, who were both visiting China, about the possibility of an agreement. The Chinese firm, founded in July 2001, intends to produce 900,000 metric tons this year and plans to expand its capacity by 2016 to 1.2 million tons.
Eyes on U.S. market
Black Cat has seven factories with 24 production lines within China, including Beijing. It exports as much as a third of its product worldwide. The firm's customers include Michelin, Bridgestone and Goodyear, among others, in Asia and in Europe.
"They are truly interested in the North American market for future growth, and they figured the best way was to go with someone like us," Moran said.
He believes HB's experience as an extensive supplier to the rubber industry made it an attractive partner. "Our vast customer base and diverse products made sense to them."
HB, founded in 1986 as a low-cost provider to the rubber, plastics and coatings industries, has an extensive customer list. The firm distributes "everything from polymers on down," ac¬- cording to Moran. Kumho Petrochemical Co. Ltd. supplies NBR, BR and SBR to HB Chemicals for distribution in North America.
HB recently became the sole distributor for the Cilbond rubber-to-metal bonding agent line in Canada.
"My tagline is, generally we have everything that anybody mixing rubber will need," Mor¬an said.
HB has no immediate plans to add to its work force of 31 because of the current agreement, but that could change.
The contract will be re-evaluated after two years. Moran is confident in his company's ability to market the product.
"I think HB Chemical is uniquely positioned to bring new products to the market because of the service-oriented nature of our business," he said. "And we stress to Black Cat that we go after the largest customer as hard as we go after the smallest customer."