CLEVELAND—Himadri Specialty Chemical Ltd. of India decided now is the time to aim its carbon black products at both Europe and North America, and it is using a new capacity expansion and local support to help make those plans a success.
The integrated specialty carbon company is adding two new carbon black lines at its headquarters facility in Kolkata, India, that will boost its capacity by 50 percent to 180,000 metric tons, according to George Haines, Himadri business director for North America.
Haines, who discussed Himadri's plans during the recent ACS Rubber Division's International Elastomer Conference in Cleveland, said one of the new lines will begin commercial production in January and the other in February. The financial investment was not disclosed.
He said the two current carbon black lines include one soft line that is used for tire carcass grades, tire sidewalls, hoses and other non-tire applications. The other is a hard line mainly used in tire tread grades, offering abrasion resistance and highly reinforcing grades compared to the soft lines.
The new capacity will allow Himadri to expand more into specialty grades of carbon black, including clear grades, a full line of ASTM grades and the firm's Klarex-brand specialty blacks, Haines said.
Himadri was founded in 1990 by the Choudhary family, initially focusing on feedstock materials such as coal tar pitch, which is used in steel manufacturing. It now has seven manufacturing facilities in India and one in China, according to its website. Its stated aspiration is "to emerge as one of the leading specialty carbon chemicals conglomerates in the world on the back of an unmatched product portfolio, cutting-edge research and best-in-class technical capabilities.
Haines said the firm forward-integrated about 11 years ago into carbon black, and with the expansion upcoming decided the time was right to branch out, hiring a person in Europe to support business there and Haines to lead efforts in North America.
Spreading its wings
Himadri hired Haines in February 2019 to build the company's infrastructure in North America. The industry veteran came from Cabot Corp. and saw the offer as a unique chance to build a business from scratch.
"It's a once in a lifetime opportunity to get with a very solid company like Himadri that's well-financed and well capitalized to start from scratch," he said. "It's not like a true start-up where you have no money and have to sell your home to start a new company. I get that experience, but with a well-financed company."
Himadri bills itself as the third largest carbon black supplier in India, behind Birla Carbon and Philips Carbon Black Ltd., and isn't in the Top 10 globally. "We're small, but we'll find our spot where we can offer value," Haines said.
And that includes in the competitive North American landscape. One reason for that, he said, is that the dynamics of the carbon black industry have demand growing with all the new tire plants coming online, but where future material availability will be tight. That is because most of the domestic producers aren't looking to expand capacity in the U.S. because it is becoming cost prohibitive because of Environmental Protection Agency requirements and other economic issues.
"Over time North America is going to become a net importer of carbon black," Haines said. "You need imported product and we felt we could fine our niche in the market to support that. You see a much higher presence of foreign companies coming to the U.S."
That's not to say it will be easy. He said the domestic suppliers also are expanding outside the U.S., so they will have products available to import as well. And while Chinese carbon black suppliers aren't expected to factor in because of tariffs, producers from Russia and others in India may play a role.
But while Himadri isn't large in terms of capacity, Haines said it sports a broad portfolio that will make it attractive to potential customers. "We think we can find some places where we can supplement domestic supply and give customers security of supply, give them high quality and give them an option beyond just the domestic suppliers."
Starting from scratch
The first step Haines took in setting up a presence in North America was to get technical service on board. That entailed hiring Irene Yurovska, an industry veteran and also a former Cabot colleague, as vice president of technical service for rubber.
The organization also had to set up third-party warehouses and decanting stations, which were needed because bulk shipping from India is prohibited.
ChemSpec Ltd. of Uniontown, Ohio, was signed on as the exclusive distributor in the U.S. for the tire and non-tire rubber product markets, and for tires accounts in Canada. Dempsey Corp. will be distributor for non-tire customers in Canada, and Haines said the firm still is working on setting up distribution in Mexico.
"I'm happy with progress so far," he said. "We're in the process of getting our brand out there, and customers are getting some familiarity with the name."
The Himadri official said having a presence at the IEC in Cleveland was key in helping shape its message to customers and explain the supplier's value proposition.
The carbon black producer currently is involved in the qualification process, he said, by sending out samples and proving its capabilities. "We're highlighting how our business model works and make sure they understand we will keep stock in the U.S., so lead times aren't going to be an issue," Haines said.
One key differentiator for Himadri is its ability to supply its own feedstock, allowing it to make more of the specialty grades. "I think we can compete better and provide supplemental supply in some of the specialty, clean, low sulfur grades," he said. "Those are the areas where we will probably be more successful."
With a North American market of about 1.8 million tons, Himadri doesn't need to buy 30 percent market share to be successful. "We can find success and be a good option for someone who wants security of supply, particularly in more difficult to make grades where customers want other options," he said. "Some companies are thinking long term, and they're going to want an imported option just so they can fill certain gaps, and that is where our role will be."
Haines does know there are some concerns going forward, foremost being that market conditions are starting to soften. "There is uncertainty in trade and uncertainty in the economy, and an election is coming up," he said. "We're getting samples tested, but at the end of the day, those are commercial discussions and there's an element of uncertainty, and that makes people more cautious. They may not be as willing to switch."
Another variable is a new International Maritime Organization regulation taking effect in 2020 that bans ships from using fuels with sulfur content above 0.5 percent, compared with 3.5 percent now. Haines said one of the low-sulfur fuels ships will use is the same one the North American carbon black industry uses as feedstock, a scenario that could have a potential upward impact on pricing.
"The rubber industry is facing softening demand and the ability to absorb higher cost is much more challenging an environment today vs. even a year ago when things were much more robust," he said, adding that Himadri's backward integration can help smooth out some of those bumps.
While Haines has a lot of autonomy in leading the North American business, there is a good deal of support from the parent organization. One example of that is the head of Himadri's research and development unit presenting one of the two papers the firm gave at IEC. He said that puts them on the same technical field as some of the larger carbon black players and ahead of the Chinese importers.
Access to Himadri's top-notch laboratory in India that Yurovska has access to also is a benefit. That helps in getting testing done for customers, he said, and Yurovska also can guide her Indian counterparts in what data is needed when looking at formulations that are unique to the U.S.
"North American customers like to see that you're committed to the market," Haines said. "They don't want to see you here and then when things get strong elsewhere, you pull out and go away. By having myself and Irene here, it demonstrates that we're committed to the North American market even when things are soft or robust. We're here to sell products strategically and sustain that long term."