DEC forecasts high carbon black prices in 2006

Unprecedented high energy costs, a continued tight supply and transportation concerns will remain the dominant issue in the coming year, according to the president of a U.S. carbon black producer.
“Rising costs of production, specifically from increases in feedstock, natural gas, and transportation costs aren’t going away and are expected to be major challenges in 2006,” said Jack Clem, president of Degussa Engineered Carbons (DEC). “Higher costs negatively impacted our results in 2005 and we expect them to affect us again this year.”
DEC headquartered in Parsippany, N.J. and co-owned by Degussa AG of Dsseldorf, Germany, and Engineered Carbons Incorporated of Montvale, N.J., produces and markets furnace grade carbon blacks for the rubber and pigment industries in North America and thermal blacks worldwide.
Clem noted that last summer, DEC increased its energy surcharge for carbon black and thermal black grades in North America because of higher energy costs.
“Since then, energy prices have not fallen significantly, and we expect them to continue at unprecedented levels for much of 2006,” he added.
Clem noted DEC’s energy surcharge represents only a portion of the total energy costs of carbon black production and distribution and will remain in effect until further notice.
Clem added that DEC’s plan to convert a unit at its Orange, Texas carbon black facility to tread grades was completed on time, just after New Year’s.
The transformation of the unit, which formerly produced carcass blacks for the rubber industry, will not increase overall capacity of the Orange plant or of DEC.
“The shift in production to tread grades will ensure that we meet our customers’ needs as market demand increases for these types of grades,” said Clem.
Clem also pointed out that DEC’s two plants affected by Hurricane Rita are back in full production.
DEC produces and markets furnace grade carbon blacks for the rubber and pigment industries in North America and thermal blacks worldwide.