In the tire market, those bright spots have been the commercial tire industry—which includes retreading—and the ag tire market.
Growing food and delivering essential goods remained key components of everyday life, even as many other facets of business and manufacturing halted, so ag tire and commercial tire makers continued operations, Ita said. Another silver lining for carbon black makers was manufactured rubber goods, which continued to see steady demand from essential industries.
"Looking around, anything you see as essential is still running," he said.
That's a good thing for carbon black companies supplying makers of rubber goods that support those industries.
"We are starting to see the beginnings of recovery for the tire markets in recent weeks," Cabot said. "At the same time, we are seeing a number of applications that are growing or potentially benefiting from the COVID-19 environment. Specifically, strong demand remains in the agricultural space as well as applications such as packaging, and specifically food packaging. These are important markets for both our carbon black and masterbatch products lines."
Sometimes, it's the most difficult of circumstances that bring out the best in people. That has been true for Cabot, which has seen its employees step up and help their communities, friends and neighbors with acts of kindness.
"We are also extremely proud of our Cabot team across the globe who have stepped up to support their local communities during this challenging time, from donating personal protective equipment and contributing raw materials for the production of hand sanitizer, to helping supply food to children who are without access to school meals," Cabot said.
A sense of normalcy
Even with the good news, one question looms for carbon black makers: When will things return to normal?
Unfortunately, Ita said, there are no easy answers.
Initially, Notch Consulting had projected that demand for carbon black would grow slightly in 2020, compared to 2019. Last year, global demand for carbon black reached 13.7 million metric tons, and demand was expected to grow to about 14.2 million in 2020, according to Notch Consulting's Carbon Black World Data Book.
In North America, carbon black demand was around 1.9 million tons last year, and Notch Consulting had assumed that demand would grow slightly this year to about 1.95 million tons.
But the impacts of the coronavirus coupled with the plummeting prices throughout the oil industry this year changed that projection. Notch Consulting now estimates that global demand for carbon black will be somewhere around 10.5 million tons, while North American demand likely will be somewhere around 1.45 million tons.
"The other thing we all have to acknowledge is that nobody—nobody—knows what this (recovery) is going to look like," Ita said. "Even if we look to the financial crisis of 2008-09, it really is different because that crisis is not what we are looking at now. There were no limits on people leaving the house. Maybe people were reluctant to spend money, but it's nothing like anything that we are (experiencing) now."
For instance, a second wave of infections in the fall could result in an economic hit as big or bigger than the one the world faced this spring. If that's the case, it may be impossible for some companies to overcome.
"I don't know that many companies can survive that stress test," Ita said. "My fear is that people will not survive this downturn, even companies that were pretty stable. So far, the quarter results have been concerning, but have not been disastrous, so companies may have gotten through the first part of this crisis."
Orion, in particular, remains optimistic about the road ahead despite the economic challenges it currently faces.
"While uncertainties continue, society will emerge from this, and our end markets will rebound," Painter said. "In particular, we believe driving is going to be a popular mode of transportation, and we are working to be stronger than ever to serve our customers."
For Cancarb, the economic downturn has been manageable so far. To maintain costs, the company has been following the recommendations of its parent company, Tokai Carbon, but has not had any layoffs.
In a May 12 financial statement, Tokai said the COVID-19 pandemic will require it to "minimize the capital expenditures, implement thorough cost reduction, reduce inventory to generate cash and secure higher financial liquidity."
While capital expenditures have been reduced, Cancarb is moving forward with plans to expand capacity at its Medicine Hat, Alberta, facility with the addition of a sixth production unit that will add 9,000 metric tons of capacity. The project timeline has not been altered as a result of the pandemic, and is slated for completion later this year, according to Donnelly.
"This will give us much more flexibility with operating and maintaining our other five units, but we are also optimistic that the research and development efforts that we are now engaged in will lead to an increase in our sales volumes in the very near future," he said. "We will be able to meet all of the volume requirements of our customers and will continue to focus on growing the thermal carbon black business along with the economic recovery."
The Medicine Hat expansion is part of a $40.1 million investment disclosed by Cancarb last year. That cost also included the purchase of a warehouse that will add 27,000 square feet of additional storage capacity, bringing the company's total warehouse space in Medicine Hat to 90,000 square feet.
Cabot also has found ways to weather the economic downturn, mainly by reducing short-term costs that won't hinder the company's ability to ramp up and meet demand once it returns.
"We eliminated all discretionary spending, stopped travel, curtailed production, tightened plant spending and our President and CEO Sean Keohane temporarily suspended his salary," Cabot said. "Finally, we have further reduced our capital expenditure forecast by $25 million such that our capital expenditures are expected to be approximately $200 million for fiscal year 2020."
Even as Cabot is working to maintain its financial stability, it is seeing many opportunities for growth. Continued investments in applications such as batteries and engineered elastomer composites (E2C) are setting the company up for growth, once the markets stabilize.
"Our recent acquisition of Sanshun, a leading carbon nanotube producer to the battery sector, will strengthen our position in conductive carbon additives," Cabot said. "We also announced the commercial deployment of the first E2C solution to help tire manufacturers unlock superior performance sustainably and economically. Both developments position us to capitalize on the transformational potential of these markets."