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June 28, 2018 02:00 AM

Cabot to expand carbon black capacity globally

Mike McNulty
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    BOSTON—Cabot Corp. is making giant strides to ensure the company's customers continue to have an ample supply of carbon black on hand in the future, especially with the threat of a global carbon black shortage in the forecast.

    The company has launched a major, widespread program that will expand or upgrade its production facilities in order to significantly boost the company's worldwide carbon black capacity by more than 300,000 metric tons. Much of that capacity is aimed at the industrial rubber, tire and specialty products segments.

    Included in the global program is a capacity expansion at the firm's plant in Cilegon, Indonesia, along with operational improvements and debottlenecking projects at 18 of the company's carbon black complexes.

    Cabot will invest about $120 million on the expansion at the Cilegon site, which will increase the plant's capacity by 160,000 metric tons. The firm will earmark about $50 million in capital expenditures for more than "150,000 metric tons of debottlenecks across our global network," according to Bart Kalkstein, senior vice president of the company and president of Reinforcement Materials.

    He said the projects will optimize the company's assets and upgrade its technology.

    Part of the investments include the addition of two new machinery lines and additional personnel to operate the units at the Cilegon facility, which began operating in 1988. New equipment also is being added as part of the debottlenecking projects at the other Cabot plants spread across the globe.

    Facilities that are part of the bottlenecking and operational improvement projects are located in the Americas, Asia, and the Europe, Middle East and African region.

    Cabot has completed about one third of the capacity expansion thus far, with full completion of the projects expected by 2021. Overall, the investments will increase Cabot's annual carbon black capacity to about 2.5 million tons.

    "Today Cabot serves customers around the world and this global program of capacity expansion will allow us to continue to serve the growing needs of our customers worldwide," Kalkstein said. "Specifically, the demand for carbon black in South Asia is currently heavily reliant on imports, and our existing capacity in Indonesia serves customers in South Asia."

    He said the new capacity will help deal with the increasing carbon black demand in South Asia, which is growing at a 4-5 percent clip per year. "Our tire and industrial rubber customers are making significant investments in South Asia and, as their partner, they are looking for us to provide the performance materials for their new investments."

    Demand for carbon black in North America already is beginning to outstrip production, according to a presentation from Sid Richardson Carbon and Energy Co. at the Clemson University Tire Industry conference in April.

    Focusing on the projection of the carbon black market in North America, Sid Richardson forecast a shortfall of about 375 million pounds by 2025. A raw material shortage is inevitable, creating the need for an increase in carbon black production in the region or larger carbon black imports, according to the presentation.

    Cabot's Kalkstein did not zero in on the North American market when he discussed possible carbon black shortages, concentrating instead on the global picture.

    Boston-headquartered Cabot continues to see tight utilization rates worldwide, and limited supply expansions on the horizon, he noted. Utilization rates currently are in the mid-80s globally, he said, with some markets being stronger than others.

    "We anticipate that demand growth will soon outpace supply for certain grades of carbon black," Kalkstein said.

    Investments Cabot currently is making at its plants, which will allow them to operate at high utilization levels, will give the firm's customers the security of reliable supply and the availability of premium products, he said.

    In terms of the latest Cabot expansion projects, "part of our corporate strategy is to invest for growth in our core businesses," according to Sean Keohane, president and CEO of Cabot. The investments "clearly showcase our commitment to be the partner of choice for our customers, not only for today, but into the future.

    "Adding this new capital efficient capacity will provide a lever for growth for our Reinforcement Materials and Performance Chemicals segments and contribute to the execution of our corporate financial and strategic objectives," Keohane said.

    Kalkstein said that once the expansion is complete at the Cilegon facility, it will become one of the largest plants in the Cabot network. Among its other largest facilities are those located in North America, the firm's three newest sites in China, and another in the EMEA region.

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