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Dwindling Carbon Black Production Offers Lucrative Opportunities to both Domestic and International Carbon Black Manufacturers in India

Carbon black supply shortfalls owing to stringent import duties and shutdown of North India based carbon black giant, CCIL, are anticipated to provide worthwhile prospects for multinational carbon black producers to foray into the Indian market.

India: Growing disparity in the demand and supply of carbon black in India has led to shortfalls in the availability of carbon black across the country. As a result, tire manufacturers representative body ATMA has urged the government to abolish anti-dumping duties on imports of carbon black from countries such as, China and Russia and regulate exports of carbon black, to maintain viability in the MSME segment of tire and rubber manufacturing industry, avoiding unplanned factory shutdowns and to counter lowering capacity utilization levels.

In 2016-17, domestic carbon black production stood at 8.1 lakh tons, with a comparable measure of consumption, while exports were at 1.14 lakh ton and imports remained at 84,000 ton. Whereas, in 2017-18, domestic carbon black production stood at 8.4 lakh ton, while real utilization was at 9 lakh ton and exports were at 1.2 lakh ton. Import of the raw material remained at 96,000 ton.

However, another downturn in the domestic carbon black industry emerged, as the Uttar Pradesh Pollution Control Board ordered shutdown of a north India based carbon black production giant, Continental Carbon Limited (CCIL), pertaining to their violation of the standards of Air (Prevention and Control of Pollution) Act, 1981. CCIL, the company that enjoyed over 10% share in the Indian carbon black market, has closed its fully equipped carbon black facility having a production capacity of 85,000 tons. The authority recommended immediate shutdown of the facility, post measurement of PM2.5 and PM10 particles in the vicinity and non-adherence of the CCIL to any pollution control measures on the chimneys.

Furthermore, ATMA requests the Indian government to allow tire manufacturing companies to import carbon black on an obligation free premise to the extent of the current hole amongst carbon black demand and supply. Further, ATMA added, export of carbon black from India in the meanwhile should be controlled by method for settling a base with higher export price or minimum export quantity measures, then only India will be able to maintain a balance for the tire industry.

According to TechSci Research, the Carbon black is used as a strengthening filler in tires. In 2016-17, the countries largest carbon maker Philips Carbon Black, reported a strong growth of over 15 percent as the demand of Carbon black is increasing due to growing production and sales of automobiles in India. Many manufacturers of Carbon black will be investing heavily on their plants over the next five years in the country. Moreover, accessibility of cheaper energy resources and lower taxes are the main motives attracting the global tire manufacturers to India and this trend is likely to boost the consumption of carbon black in the Indian market over the next five years as well.

According to the recently published report by TechSci Research, India Carbon Black Market By Type (Commodity Carbon Black & Specialty Carbon Black), By Application (Tire, Industrial Rubber, Belt & Hoses & Others), Competition Forecast and Opportunities, 2012-2026, India carbon black market stood at $ 879.26 million in 2016, and is projected to grow at a CAGR of 8.78%, in value terms, to reach $ 2,003.14 million by the end of 2026, on the back of expanding manufacturing facilities of tire manufacturing companies coupled with implementation of antidumping duty on carbon black imports by Government of India. Robust growth in the automotive sector and expansion of vehicle manufacturing facilities has increased demand for tire products. Growing demand for tires in automotive industries is anticipated to further drive leading tire companies to expand their production bases and boost sales of carbon black in India in the coming years.

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