Issue No 229 April 2018

Chemical Market Intelligence
CARBON BLACK
Issue 229 30th April2018
Price Summary
North America
N234 Contract $1,021 - $1,043/mt 46.40 - 47.40cts/lb ex-works
N326 Contract $818 - $836/mt 37.20 - 38.00cts/lb ex-works
Latin America
Andean Region
N339 Contract $850 - $875 mt delivered
N326 Contract $800 - $825 mt delivered
Western Europe
Domestic
N220 Contract $1,180 - $1,208 € 992 - € 1,015 mt delivered
N339 Contract $1,139 - $1,172 € 957 - € 985 mt delivered
Central Europe
Russian Exports
Middle East
Imports
N220 Contract $1,200 mt delivered
N330 Contract $1,130 mt delivered
Asia
India
N220 Contract $1,250 mt excl local taxes
N330 Contract $1,080 mt excl local taxes
Currency $ Equivalent: € 0.833 £0.734 ¥109.30

Currency € Equivalent: $1.190 £0.881 ¥131.16
Chemical Market Intelligence

75 Crossways, Three Bridges
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Tel: +44 (0) 78 6659 6141
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Carbon Black Issue 229 – April 2018
Feedstock
Crude oil prices have reached their highest levels for 40 months, underpinned by tightening global oil
supply, and the possibility of new US sanctions on Iran.
Global oil demand is assessed to have increased by 1% year on year to average 96.5mbpd in Q1 2018,
driven by cold weather in the US. Current demand for crude in the US ahead of the holiday driving
season is strong, with most recent data indicating combined diesel and gasoline demand increased year
on year by 845,000bpd in January 2018. Weekly data for February and March confirm the trend of strong
US crude demand. Stronger demand for crude amongst OECD countries in Q1 2018 was partially offset
by weaker demand from developing economies with demand in China assessed to have been weaker
than expected. By contrast demand for crude in India increased sharply in the first two months of 2018.
China and India are projected to be the key drivers of increased global demand for crude in the next five
years.
Global oil supply declined by 120,000bpd in March from April due to further reductions in output by the
OPEC cartel and its non OPEC partners with production cuts totalling 2.4mbpd. Nevertheless crude oil
output was 1.4mbpd higher in March than in the same month in 2017, due to increased output in the US.
Crude oil output by the OPEC cartel declined by 70,000bpd in April from March to 32.12mbpd, due to
lower output in Venezuela and African producers.
Crude oil output in Venezuela is expected to decline by a further 200,000bpd in the coming months, with
most recent output data for February 2018 of 1.54mbpd, down from an average of 1.91mbpd in 2017.
Local sources are forecasting crude demand in Venezuela will decline to 1.2mbpd by the end of 2018, as
huge debts are preventing the country from funding maintenance in the oil sector. This combined with
hyperinflation in the country is expected to lead to more refinery closures in the coming months. Crude
output in Venezuela has declined by six times the rate pledged to the OPEC cartel, due to the economic
crisis in the country. International oil companies are reported to be evacuating some workers from
Venezuela following the arrest and imprisonment of two Chevron workers. Chevron is an important joint
venture partner with the Venezuelan state oil company on five important oil projects.
Crude oil output in Angola is declining sharply due to under investment in its costly deepwater offshore
oilfields. Output has declined at three times the rate pledged to the OPEC cartel, with crude exports from
Angola expected to decline to its lowest volume since 2008 in June 2018. The startup of production at
Angola’s Kaombo oilfield is expected from the end of 2018 adding production capacity of 230,000bpd.
Crude oil output in Angola peaked at 1.9mbpd in 2018, declining to 1.5mbpd in 2017, and is expected to
decline to 1.3mbpd in 2023.
The OPEC cartel is to meet in June to discuss its agreement to cut oil output by 1.8mbpd. The cartel is
expected to keep the production cuts in place at least until the end of 2018. Commercial inventories of
crude oil in OECD developed economies have declined to less than 50m barrels above the five year
average compared with 340m barrels in 2014. However, while inventories targets set by the OPEC have
been or are close to being met, the cartel is considering other metrics before increasing production
output. The cartel would like to see a recovery of capital investment in the oil industry which has declined
by US$1trillion in the three years due to weak oil prices since 2014.
In the US crude oil output averaged 10.59mbpd in mid April, with the number of oil rigs increasing by 5 to
reach 825 in the last week of April, the highest number of rigs since March 2015, and much higher than
the 697 operational rigs this time last year. Productivity in the US shale industry is also increasing rapidly,
with output increasing 19% year on year in February, with fewer rigs than in 2014 when output peaked.
While the OPEC cartel has cut output by 1.8mbpd, US oil producers have increased output by around
1.5mbpd, with output expected to continue to increase. Saudi Arabia’s Oil Minister reports oil output is
declining in a number of regions and the oil and gas industry needs to invest over US$20 trillion over the
next 25 years to meet increasing demand and compensate for declining demand in existing oilfields.
US inventories of gasoline have been declining for almost two months and are now below their five year
average, while US commercial crude oil inventories are far below the levels of recent years, and have
been below their five year average for the last five weeks.
© Chemical Market Intelligence 1

The larger than expected reductions in OPEC’s crude production is leading to speculation that the global
oil markets are tightening too quickly and could drive crude prices to above US$80pb. There are
suggestions that the OPEC cartel could have increased its target prices for crude to US80pb or even as
high as US$100pb, in order to balance fiscal budgets. Saudi Arabia has an ambitious development
agenda which could be driving the country’s oil price objective to be in the range US$80pb to US$100pb.
Indeed the Saudi Oil Minister has suggested the global economy has the capacity to accommodate
higher oil prices, as there has been no tangible impact to date on demand from higher crude prices.
The table below details carbon black feedstock export oil exports from the US for the period January to
March 2018.
US Exports of Carbon Black Feedstock Oil

Jan/March 2018 Prices are FAS (Free Alongside Ship)
Destination Jan-March Jan-March Jan-March Jan-March

2018 2018 2018 2018
Barrels Mt US$/Barrel Average US$/mt
India 1,551,766 282,139 60.03 330.17
Thailand 747,739 135,953 64.48 354.64
Egypt 360,945 65,626 61.89 340.40
Singapore 307,667 55,939 52.54 288.97
Italy 267,396 48,617 60.73 334.02
Indonesia 253,000 46,000 67 368.50
South Africa 215,437 39,170 62.04 341.22
South Korea 192,000 34,909 34.5 189.75
Canada 59,601 10,837 44 242.00
El Salvador 424 77 24.75 136.13
Ireland 70 13 115.14 633.27
Total 3,956,045 719,281 59,.58 327,.69
Shipments for the month of March 2018 are detailed in the table below.
US Exports of Carbon Black Feedstock Oil

March 2018 - Prices are FAS (Free Alongside Ship)
Destination March 2018

Barrels Mt US$/Barrel US$/mt
India 903,026 164,187 60.33 331.82
Thailand 355,893 64,708 62.59 344.25
South Africa 215,437 39,170 62.04 341.22
Italy 133,188 24,216 61.47 338.09
South Korea 85,000 15,455 34.5 189.75
Canada 17,650 3,209 43.99 241.95
El Salvador 424 77 24.75 136.13
Ireland 70 13 115.14 633.27
Total 1,710,688 311,034 59.65 328.08

North America
Economic growth in the US reached an annualised rate of 2.3% in Q1 2018 down from 2.9% in Q4 2017,
caused by cautious consumer spending which increased to its slowest rate for in almost five years at
1.1%, down from 4% in Q4 2017. The lower rate of increase in consumer spending compared to a high
base comparison in Q1 2017 when consumers were forced to replace hurricane damaged goods.
Business spending on new equipment also slowed in Q1 2018. There is an expectation that consumer
spending will increase in the coming months as the impact of tax cuts feeds through into consumers
pockets.
Light vehicle sales declined by 4.8% year on year to 1.36m vehicles in April 2018. On a seasonally
adjusted basis light vehicle sales were 17.17m vehicles in April, the highest monthly rate to date this year.
Higher interest rates this year are expected to dampen new vehicle demand as the year progresses,
driving up monthly car payments on loans. In addition millions of nearly new vehicles will become
available this year after coming off lease.
Light vehicle production in North America declined by 3% or by 150,000 vehicles in the first three
months of 2018 versus 2017, as detailed in the table below.
Light Vehicle Production (North America) 2017 vs 2018 –Three Months only – 000’s
Vehicle 2017 2018 % Change 2018

Passenger Car 1,596 1,309 -18
Light Truck 2,913 3,069 5
Total 4,509 4,359 -3
In the US light vehicle output declined by 3% or by 85,000 vehicles to 2.86m vehicles in Q1 2018, driven
by a decline in passenger car output. In Canada light vehicle output declined by 11% or by 68,000
vehicles to 529,000 vehicles year on year in Q1 2018. In Mexico light vehicle output increased marginally
by 0.4% in Q1 2018, with a 20% increase in output in January 2018 offset by a near 11% decline in
output year on year in March. However, light vehicle exports from Mexico increased by 8% to 835,000
vehicles in Q1 2018, led by a 42% increase in export sales by General Motors to 201,000 vehicles.
General Motors has stopped reporting its vehicle sales on a monthly basis switching to quarterly
reporting. However, industry assessments estimates suggest the company’s vehicle sales were flat
versus 2017 in April 2018 at best, or up to 8% down year on year.
Ford reported a 4.7% decline in vehicle sales year on year in April to 204,600 vehicles from 213,000
vehicles in the same month in 2017. Passenger car sales declined by 15% to 42,000 vehicles, while sales
of sports utility vehicles declined by 4.6% to 69,900 vehicles, offset in part by a 0.9% increase in truck
sales to 92,300 trucks. Total fleet sales declined by 1.4% in April to 33% of total sales volumes.
Cumulatively Ford reported a 3% decline in light vehicle sales in the first four months of 2018 to 800,000
vehicles, equivalent to a reduction of 27,000 vehicles from the same period in 2017. Sales of passenger
car sales declined by 14% to 171,000 vehicles, and sports utility vehicles by 3.6% to 272,000 vehicles
offset by a 3% increase in light truck sales. Indeed sales of the F Series truck accounted for 37% of Ford
branded vehicle sales.
Fiat Chrysler reported a 4% increase in vehicle sales in April to 184,000 vehicles, driven by a 20%
increase in sales of Jeep branded trucks. By contrast Ram truck sales declined by 9% year on year to
43,000 vehicles, although retail sales reached a record 36,500 vehicles. Retail sales declined year on
year by 1% due in part to there being two fewer selling days at 143,000 vehicles, with fleet sales
accounting for 22% or total vehicle sales volumes. Cumulatively Fiat Chrysler reported a 1.7% increase in
vehicle sales to 698,000 vehicles in the first four months of 2018, equivalent to an increase of 12,000
vehicles year on year.
Toyota reported a 4.7% decline in vehicle sales to 192,000 vehicles in April, with sales of sports utility
vehicles and pickup truck sales declining by 1.5% offset by a 12.7% decline in passenger car sales.
Tyre shipments in the US are forecast to increase by 0.8% or by 2.5m tyres to 319.2m tyres in 2018
versus 2017, as detailed in the table overleaf.

US Tyre Shipments 2017 vs 2018* - 000’s
Tyre 2017 2018* % Change 2018

OE 45,200 45,700 1
Replacement 209,700 210,600 0.4
Total Passenger Car 254,900 256,300 0.5
OE 5,400 5,500 1.9
Replacement 31,300 31,800 1.6
Total Light Truck 36,700 37,300 1.6
OE 5,400 5,600 3.7
Replacement 19,700 20,000 1.5
Total Med/Heavy Truck 25,100 25,600 2
Grand Total 316,700 319,200 0.8
* Forecast
The forecast increase in tyre shipments made by the US tyre association was made before the recent US
tariff announcement affecting sources of imported steel for tyres. In addition tariffs upon some individual
Chinese producers of passenger car tyres have been lowered in the past month.
Demand for passenger car tyres is forecast to increase by 1.4m tyres, of which replacement demand is
projected to increase by 900,000 tyres in 2018 versus 2017. Light truck tyre demand is forecast to
increase by 600,000 tyres, driven by an increase in replacement tyre demand of 500,000 tyres. However,
most recent reports for the first three months of 2018 indicate demand for passenger car and light truck
tyres declined by 5% year on year in the OE market, and by 1% in the replacement market in the first
three months of 2018 versus 2017. Cooper Tire is projecting an upturn in demand in the US consumer
tyre market in 2H 2018. Clearly demand will have to pickup significantly to offset weaker market
conditions in Q1 2018. There is some puzzlement as to why consumer demand for tyres was so weak in
the first three months of 2018, given strong market conditions. In part winter weather was a factor
dampening demand, but weak demand also underlines the trend in consumer tyre demand in recent
years, which has been lower than expected.
In 2017 the US passenger car tyre replacement market increased by 0.9% to 209.7m tyres in the US, but
tyres with a diameter to 20” increased by 9.9%, while tyres with a diameter of 15” declined by 16.8% in
2017, and tyres with a diameter of 16” declined by 11% in 2017. In addition passenger car tyres with a
diameter of 17” declined by 2.9% in 2017.
Shipments of light truck tyres in the replacement market declined by 2% to 31.3m tyres in 2017, and on
average are almost double the price of a standard passenger car tyre at $196 each.
Medium and heavy truck demand in the US is forecast to increase by 2% or by 500,000 tyres to 25.6m
tyres in 2018, with demand increasing in both the OE and replacement markets. Most recent reports for
Q1 2018 indicate demand for medium and heavy truck tyres increased by an exceptional 20% in Q1
2018, and by 4% in the replacement market versus Q1 2017. Very strong truck tyre demand reflects
surging business and freight volumes in the US, also supported by an increase in construction projects.
Demand for heavy trucks is expected to continue to increase in the US in 2018 peaking in 2019. Class 8
truck sales in the US and Canada are expected to increase to be in the range 235,000-265,000 trucks in
2018, increasing to around 300,000 trucks in 2019. Medium duty truck sales are projected to peak in
2019 at 250,000 trucks. The US trucking association reported its freight tonnage index increased by 3.7%
in 2017 versus 2016.
The US tyre association reported a 5.3% decline in shipments of light vehicle tyres for its members, while
total industry shipments including non members of the US tyre association, namely overseas tyre
companies declined by 1.9% for Q1 2018. This would suggest an increasing market share for tyre imports
into the US for Q1 2018.
Passenger car tyre imports to the US declined by 2.7% or by 1m tyres to 35.1m tyres in the first three
months of 2018 versus 2017, as detailed in the table overleaf.

Passenger Car Tyre Imports (US) 2017 vs 2018 – Three Months only – 000’s
Tyre Diameter 2017 2018 % Change 2018

13” or less 100 200 ++
>13”<14” 1,100 900 -20
>14”<15” 4,900 4,200 -14
>15”<16” 8,600 7,600 -12
>16”<17” 9,600 9,700 0.6
>17”<18” 5,400 6,000 10
>18” 5,200 5,700 10
Other 1,200 800 -33
Total 36,100 35,100 -2.7
Passenger car tyre imports to the US declined year on year by 2.7% or by 1m tyres to 35.1m tyres in the
first three months of 2018 versus 2017. Car tyre imports from Indonesia declined by 1.3m tyres to 3.1m
tyres in Q1 2018. It is possible that Hankook Tyre, which operates a tyre plant in Indonesia, has reduced
the volume of tyres it imports from its Indonesia plant to allow for the ramp up of tyres at its new US tyre
plant. Reducing tyre output at its Indonesia plant is probably less expensive than at its higher cost plants
in South Korea. Passenger car tyre imports from China declined by 800,000 tyres year on year to 2.2m
tyres, and from Mexico by 340,000 tyres in Q1 2018. By contrast passenger car tyre imports from
Thailand increased by 1m tyres to almost 8m tyres in Q1 2018, as Chinese tyre producers with plants in
Thailand probably ramp up production and exports to the US market. Car tyre imports from Canada
increased by 600,000 tyres and from Vietnam by 730,000 tyres to 1.8m tyres in Q1 2018.
The overall decline in the volume of passenger car tyre imports to the US in Q1 2018 probably reflects in
part weak demand in the US consumer tyre market. However, imports of premium passenger car tyres
with a diameter of 17” or above continued to increase in Q1 2018 versus 2017, increasing by 10% or by
1.1m tyres to 11.7m tyres. The table below details passenger car tyre imports for tyres with a diameter or
17” or above into the US for the first three months of 2018 versus 2017.
Passenger Car Tyre Imports with a rim diameter of 17” or above (US)
2017 vs 2018 – Three Months only – 000’s
Source 2017 2018 % Change 2018

Thailand 1,857 2,221 20
S Korea 1,233 1,523 23
Mexico 993 1,222 23
Canada 604 949 57
China 982 771 -21
Other 4,967 5,044 1
Total 10,630 11,730 10
Imports of premium passenger car tyres with a diameter of 17” or above from Thailand increased by
360,000 tyres in Q1 2018; from Canada by 345,000 tyres; from South Korea by 290,000 tyres and from
Mexico by 220,000 tyres in Q1 2018. Given the shift in passenger car tyre production in the US towards
premium passenger car tyres with a diameter of 17” or above that, the increase in premium car tyre
imports could have had some impact upon domestic premium car tyre production in the US in Q1 2018.
There was a net inflow of passenger car tyres into the US of 500,000 tyres to 29.1m tyres in the first three
months of 2018 versus 2017, as detailed in the table below.
Passenger Car Tyre Imports, Exports & Net Trade (US) 2017 vs 2018 – Three Months only – 000s
Passenger Car Tyres 2017 2018 % Change 2018

Imports 36,100 35,100 -2.7
Exports 6,500 6,000 -8
Net Trade 29,600 29,100 -1.6

There was a net increase in the inflow of truck tyres into the US of 4% or 300,000 tyres to a net inflow of
7.2m tyres in Q1 2018 versus Q1 2017, as detailed in the table below.
Truck Tyre Imports, Exports & Net Trade (US) 2017 vs 2018 – Three Months only – 000s
Truck Tyres 2017 2018 % Change 2018

Imports 10,000 10,300 3
Exports 3,100 3,100 -
Net Trade 6,900 7,200 4
Truck tyre imports to the US increased by 340,000 tyres to 10.3m tyres in Q1 2018, driven by an increase
in imports from Thailand of 670,000 tyres to 2.5m tyres and from China of 580,000 tyres to 2.25m tyres in
Q1 2018. By contrast truck tyre imports to the US from Canada declined by 800,000 tyres to 1.5m tyres in
Q1 2018.
Truck tyre exports from the US were unchanged in volume in the first three months of 2018 versus 2017.
The Chinese tyre company Double Coin has started to ship tyre to the US from its plant in Thailand,
which it expects will increase its share of the US truck and off road tyre market. The company is ramping
up output at the plant to full production capacity of 2.5m radial truck tyres and 50,000 off road tyres per
annum.
Goodyear reported a near 3% decline in tyre sales volumes from its Americas tyre business in Q1 2018 to
sales of 16.7m tyres from sales of 17.2m tyres in Q1 2017. Sales volumes to the OE sector declined by
3% driven by a reduction in light vehicle production in the US, while sales of tyres to the consumer
replacement market in the US declined by 3%, better than the industry as a whole which reported a 5%
decline in sales volumes in Q1 2017. Goodyear reported sell in of tyres to distributors was weak declining
2% year on year, with some destocking during Q1 2018. However, the company reported sell out demand
to consumers in the US strengthened during the quarter, which is providing the company with some
confidence for the rest of 2018. In addition sales of 17” diameter tyres and above increased by 4% year
on year, however this was offset by a 16% reduction in demand for tyres with a diameter of less than 17”
in diameter. Goodyear is maintaining its tyre sales volume forecast for 2018, on the assumption that
weaker than expected demand in Q1, will be recovered in the remaining months of the year.
Goodyear is forecasting demand for consumer tyres in the replacement market in the US will be flat in
2018 versus 2017, or at best increase by 2%, while consumer OE tyre demand will be flat versus 2017.
The company is forecasting an increase in demand in the truck tyre replacement market of between 1%
and 3% in 2018 and around a 10% increase in the truck tyre OE market in 2018.
The decline in sales to the replacement market reflected exceptionally strong demand for passenger car
and light truck tyres in North America in Q1 2017 ahead of price increases, which pulled forward sales to
tyre dealers. However, sales volumes declined by 1.3m tyres from the 18m tyres Goodyear sold from its
Americas business in Q1 2016. This could suggest the company is losing market share in Americas tyre
markets. In addition the company reports reductions in import tariffs for some Chinese tyre producers in
the US market is leading to a return in import tyre volumes from China at the low end of the consumer
tyre market. Indeed tyre sales volumes for tyre companies that are not members of the US tyre
association, mostly represented by importers, increased by 11% year on year in Q1 2018.
Goodyear reported a 41% decline in operating income from its Americas business in Q1 2018 to $127m,
from $216m in Q1 2017, due to increased raw material costs and lower tyre sales volumes. Volatile raw
material prices as well as weak tyre market conditions has led Goodyear to the conclusion that it will not
seek to pass on higher raw material prices into tyre price increases at present, but will aim to do so over
time.
Michelin reported a 2.3% decline in tyre sales volumes globally in Q1 2018. However, the decline
followed a 7.3% increase in volumes in Q1 2017 as demand was pulled forward ahead of tyre selling
prices in April 2017. A two year comparison from Q1 2016 indicates the company’s sales volumes
increased by 5% in Q1 2018. Passenger car tyre sales volumes were flat versus Q1 2017 globally with
lower demand for OE markets of 3%, while demand in replacement markets was stable versus Q1 2017.
Michelin is forecasting a 3.5% increase in passenger car sales volumes in each of the three remaining
quarters in 2018. The company reports demand for 18” or above Michelin branded tyres increased by 7%
year on year in Q1 2018 in line with the market, and represented 37% of all Michelin branded passenger
car tyres in Q1 2018 from 33% in Q1 2017.

Michelin reported truck tyre sales volumes were flat in Q1 2018 versus Q1 2017, with demand from the
OE sector increasing by 5% driven by strong demand in North America, while replacement demand
declined by 2% compared to an 8% increase in demand in Q1 2017. Michelin reports that in North
America demand for Tier 1 and Tier 2 truck tyres declined by 7% year on year versus a 14% increase in
Q1 2017. Strong freight volumes especially in Europe and North America will contribute to a 1.5% volume
growth for Michelin in Q3 and Q4 2018.
In the specialty tyre market Michelin reports demand increased by between 5% and 7% driven by a 7% to
10% increase in the mining sector, and strong demand from OE sectors for earthmover and agricultural
tyres.
Cooper Tire reported an 8.7% decline in sales revenues from its North American operations to $485m in
Q1 2018 from $531m in Q1 2017. The company reported a 6.4% decline in light vehicle tyre shipments in
the US in Q1 2018, compared to a 5.3% decline in tyre shipments from members of the US tyre
association. This reflected weak sell out of tyres from dealers to consumers during Q1 2018, with the
challenging market conditions of 2017 carried over into 2018. However, the company does not believe the
current industry conditions are a new normal for the US tyre industry, and expect strong macro economic
conditions to drive a recovery in the tyre market in 2H 2018. Cooper Tire is also to launch new tyre
products, which it expects will lead to an increase in its tyre output in 2H 2018.
Cooper Tire reported a 25% increase in radial truck and bus tyre sales volumes in Q1 2018. The
company is believed to source its truck and bus tyres from plants in China.
Operating profits declined by 55% to US$31m in Q1 2018 from $71m in Q1 2017, resulting in a decline in
operating margin to 6.4% in Q1 2018 from 13.3% in Q1 2017. This reflected lower sales volumes and
changes in tyre selling prices. Cooper Tire focussed upon cost control during Q1 2018 reducing its tyre
inventories and reducing costs, and cut production output and its workforce at its plant in Mexico in order
to better match demand.
Hankook Tire reported a % decline in sales revenues to KRW446bn (US$412m) in Q1 2018 versus
KRW452bn (US$418m) in Q1 2017, with sales of 17” diameter and above tyres declining by 6% to
KRW256bn (US$236m) in Q1 2018. The company reports lower sales to the replacement market due to
weak market demand, while sales to the OE market were strong as the company increased sales to major
OE customers.
Bridgestone has launched a set of new sustainable procurement practices to identify and evaluate
qualified suppliers with the objective of realizing its long term environmental, social and economic
benefits. The new policies are to be applied to all purchased materials globally. The new policy is part of
the company’s longer term goal of using 100% sustainable materials in its tyres by 2050. The new policy
contains four major areas of concern, transparency; compliance to laws and regulations; product quality
ensuring highest quality materials at reasonable cost, and sustainable procurement practices. The later is
to include compliance to environmental laws and regulations, water use, land use and disaster
prevention.
Market demand for carbon black is reported to continue to have been exceptionally strong in April. The
increase in demand for carbon black is being reported despite lower volumes of vehicle production across
North America, and weak demand for consumer tyres in the US market. While this has led to some
reported reductions in tyre output, these are being offset by the ramping up of output by new US tyre
plants. Assessing the volume of increase in demand is difficult, however the increase in market demand
for carbon black combined with interruptions of carbon black supply, and planned maintenance outages
has created very tight supply conditions. This is particularly the case for tread grade carbon black.
Assuming a 3% increase in market demand for carbon black in the US in Q1 2018 versus 2017, this
would simply an increase in market demand of around 11,000mt (24m lbs), as detailed in the table below.
Estimated Market Demand for Carbon Black (US) 2017 vs 2018 – Three Months only - mt
Carbon Black 2017 2018 % Change 2018

Production 364,000 383,000 5
Imports 50,000 47,000 -6
Exports 39,000 44,000 13
Apparent Demand 375,000 386,000 3

An increase in market demand for carbon black of around 11,000mt in Q1 2018, combined with a
reduction in carbon black imports of 3,000mt and an increase in exports of 5,000mt, is assessed to have
driven carbon black output in the US to an estimated 383,000mt (842m lbs) in Q1 2018. This would
suggest carbon black output increased by 19,000mt (418m lbs) year on year in Q1 2018. This implies the
US carbon black industry is operating at or close to full operating rates, taking into account some planned
and individual unplanned plant outages. Current reports suggest that at least some carbon black
producers in the US are operating at full operating rates. With little product inventory this is causing some
issues for customers as planned plant outages are becoming due.
st
Cabot Corp has announced a price hike for rubber grade carbon black of 4.5cts/lb effective 1 June 2018
in some instances and by $100/mt in others. The price hike is to address increasing costs associated with
product manufacturing, regulatory and environmental compliance, packaging and logistics. It seems
probable the company is implementing a 4.5cts/lb increase for customers who are already accepted an
earlier price hike of 4.5cts/lb to cover the initial capital costs of implementing emission controlling
equipment to meet the EPA’s emission targets. Orion Carbons has also announced a price increase
averaging $121/mt on rubber grades due to increasing operating and logistical costs and the expense of
maintain service levels. The price increase would also support substantial price investments in its North
American rubber carbon black production.
Tight supply conditions for carbon black in North America are providing the carbon black industry with the
opportunity to address years of low pricing which have caused under investment in the industry. Carbon
black prices have been below reinvestment levels for much of the past decade. Clearly the industry will
need to address current operational issues to ensure it can continue to meet increasingly strong demand
for carbon black in the US, as it faces five years or more of sustained increasing demand for product from
the tyre industry. This issue is separate from the large scale capital investments required by the EPA to
improve air quality and reduce emissions from carbon black plants which will not have any impact upon
operational efficiency by the industry. Thirdly the industry needs to see a sustained improvement in
operational profit margins in the rubber blacks business to a level that is sustainable in reinvestment
terms if it is to meet the increasing demands from the tyre industry in the medium term. It is suggested
that these three separate issues equate to a price hike of around 10-11cts/lb for rubber grades of carbon
black in North America.
Carbon black imports to the US declined by 2,400mt to 47,000mt in the first three months of 2018 versus
2017, as detailed in the table below.
Carbon Black Imports (US) 2017 vs 2018 – Three Months only - mt
Source 2017 2018 Average Import Price

Q1 2018
US$/mt
Canada 32,242 30,072 1,189
Mexico 4,028 4,294 1,670
Japan 1,178 3,511 1,395
Russia 3,022 3,201 762
South Korea 793 1,338 1,236
Germany 2,519 1,155 2,348
Netherlands 1,068 654 3,583
Italy 461 633 1,566
Belgium 527 531 3,455
Poland 95 486 1,144
Singapore 342 321 4,772
India 627 319 2,401
Turkmenistan 93 297 2,262
Switzerland 0 232 1,269
China 1,830 224 2,362
Czech Republic 583 200 2,660
France 28 179 2,674
Other 669 184
Total 50,077 47,652 1,368

Carbon black imports from Canada and Russia probably represent much of the rubber grade carbon
black imported to the US in Q1 2018, and this declined by 2,000mt year on year, contributing to the tight
rubber grade carbon black supply conditions in the US market at present.
Carbon black exports from the US increased by 4,800mt to 44,300mt in the first three months of 2018
versus 2017, as detailed in the table below.
Carbon Black Exports (US) 2017 vs 2018 – Three Months only - mt
Destination 2017 2018 Average Export Price

Q1 2018
US$/mt
Canada 13,828 15,558 1,280
Mexico 5,558 7,074 1,394
China 5,791 5,301 2,683
Belgium 2,977 3,999 2,659
India 1,594 2,020 1,966
Japan 1,447 1,610 3,612
Germany 1,210 1,420 1,907
South Korea 1,033 1,107 3,856
Italy 836 955 1,731
UAE 1,664 907 1,092
Thailand 276 675 1,356
Brazil 1,123 661 2,207
Netherlands 123 493 1,586
Taiwan 389 472 3,035
Malaysia 346 421 3,835
Poland - 396 807
United Kingdom 115 157 2,114
Argentina 51 151 2,678
Colombia 95 125 1,550
Ecuador 78 110 1,907
France 34 77 5,227
South Africa 72 62 1,399
Other 791 552
Total 39,431 44,303 1,900
The increase in exports, was driven by an increase in exports to Canada of 1,700mt; to Mexico of
1,500mt and to Belgium of 1,000mt in the first three months of 2018 versus 2017.
Cabot Corp reported a 28% increase in sales revenues from its carbon black business in Q1 2018 to
$454m from $352m in Q1 2017. Sales volumes increased year on year by 5% in the Americas and by 9%
from Q4 2017. In Europe Cabot reported a 7% increase in sales volumes year on year in Q1 2018, and
by 12% versus Q4 2017. By contrast sales volumes in China declined by 7% year on year in Q1 2017,
and by 4% from Q4 2017
Cabot reported sales volumes of specialty carbons increased by 9% year on year in Q1 2018, and by
19% versus Q4 2017. The company is continuing to implement price increases to recover higher
feedstock costs.
Cabot reported segment earnings from its carbon black business of $79m in Q1 2018 up 46% from $54m
in Q1 2017. The increase in earnings was driven by higher prices in Asia, particularly China, and an
improved spot pricing and product mix from 2018 customer contracts, and high plant utilisation rates in
the Americas and Europe. The company is forecasting continued favourable markets and on going
benefits from 2018 supply contract agreements. Cabot is also to increase its maintenance spend in 2H
2018. Cabot is forecasting earnings from its carbon black business of between $250m and $270m in
2018 supported by improved spot pricing and high plant utilisation rates.
Cabot is forecasting earnings from its performance chemicals business which includes specialty carbons
will be in the range $200m to $215m in 2018, supported by higher pricing.

Cabot Corp has completed the expansion of its black masterbatch and compounds capacity with the
acquisition of Tech Blend, a masterbatch producer in Canada, which will now be called Cabot Plastics
Canada. In addition Cabot has invested in a new production line at its plant in Pepinster in Belgium. In
total the company has now five manufacturing locations for masterbatch and conductive compounds
globally. The new production line in Belgium will increase capacity for plastic formulations, including
conductive and engineering thermoplastics formulations, making the Belgian site Cabot’s largest
masterbatch and compounds plant globally.
Orion Carbons is to install sustainable emissions technology Haldor Topsoe Snox provided by the Danish
company, Topsoe at its carbon black plant at Ivanhoe, Louisiana, to remove Sox, Nox and dust particles
from tail gases at the plant and meet compliance with the Environmental protection Agency’s
requirements. Orion Carbons is also planning a cogeneration facility at the Ivanhoe plant to utilize energy
from the production process to supply electricity for the new control technology, the current manufacturing
processes and the surrounding communities.
Latin America
Colombia
The Colombian economy increased at a faster than expected rate of 1.8% in 2017, nevertheless it
represented the lowest rate of growth for eight years. Weak economic growth was caused by low oil
prices and weak consumer spending. Agricultural output increased by 4.9% in 2017, offset in part by a
3.6% contraction in the mining and energy sectors, while manufacturing output declined by 1%. Current
forecasts suggest the Colombian economy will increase by 2.8% in 2018.
Vehicle sales in Colombia increased by 18% year on year to 20,100 vehicles in April 2018, following a
6% decline in sales in March. Cumulatively vehicle sales in Colombia increased by 1.5% in the first four
months of 2018, to 74,300 vehicles.
Sales of passenger cars declined by 1.5% in the first four months of 2018 to 38,800 vehicles, offset by a
5% increase in light commercial vehicles to 23,000 vehicles. Sales of pickup trucks increased by an
exceptional 43% year on year in the first four months of 2018 to 4,700 vehicles. By contrast sales of
heavy trucks declined by 14% year on year to 1,570 trucks in the first four months of 2018.
Demand for new vehicles in Colombia is forecast to increase after the Presidential elections in May,
supported by improving economic conditions and a stabilising Peso exchange rate.
Vehicle sales in Colombia declined by 6% to 238,000 vehicles in 2017, the third consecutive annual
decline in vehicle sales in Colombia, due in part to an increase in sales tax on new vehicles. Passenger
car sales declined to 135,000 vehicles in 2017, down from 160,000 vehicles in 2016. The market leader,
General Motors’ Chevrolet brand reported a 15% decline in vehicle sales accounting for 21% of the
domestic market with sales of 51,200 vehicles in 2017. Chevrolet is gradually losing market share in the
Colombian market with its share declining by 3% in the past two years from almost 24% in 2016. Sales of
Chevrolet models have continued to decline year on year in the first two months of 2018.
Renault reported an 8% decline in vehicle sales in Colombia to 46,900 vehicles in 2017 accounting for
19.7% of the domestic automotive market. Sales of Renault models have also continued to decline year
on year in 2018, but became the largest vehicle seller in Colombia in March 2018 for the third month in
the past year.
In July 2017 the Mercosur trading bloc entered into a trade agreement with Colombia to allow limited
quantities of tariff free products, including passenger cars. Under the new agreement Argentina will be
able to ship 12,500 vehicles to Colombia without tariffs in the first year, with the quotas gradually
increasing to 42,000 vehicles in year four. In return Colombia is now able to export 42,000 tariff free
vehicles to Argentina and up to 50,000 vehicles to Brazil. Colombia is the third largest vehicle assembler
in Latin America, after Brazil and Argentina. It also produced 660,000 motorcycles in 2017.
Across Latin America passenger car sales reached 5.3m vehicles in 2017. Forecasts suggest the
recovery in passenger car demand will continue in 2018, with demand to increase by around 500,000
vehicles to a projected 5.8m vehicles.

Vehicle production in Colombia is reported to have declined by 5% to 74,000 vehicles in 2017 versus
Vehicle Production (Colombia) 2016 vs 2017 – 000’s
Production 2016 2017 % Change 2017

Passenger Car 78 74 -5
Light Truck 1 1 -
Heavy Truck 0 0 -
Total 79 74 -5
The decline in output probably reflects lower vehicle demand for new vehicles in Colombia in 2017,
together with the loss of market share of General Motor’s Chevrolet brand, which lost market share in the
Colombian market in 2017.
There are eight vehicle assembly companies in Colombia, with the four largest accounting for 90% of
vehicle output in the country. More than one third of Colombia’s automotive industry consists of domestic
production of knocked down kits with around two thirds of vehicles imported. It remains to be seen
whether a new trade agreement with the Mercosur countries will have a net positive impact upon vehicle
production in Colombia. Vehicle exports from Colombia declined by 2.5% in 2017 to 37,000 vehicles.
Tyre production in Colombia ceased in mid 2013 when Michelin closed its passenger car and truck tyre
plants in Colombia. Passenger car tyre imports to Colombia declined by 160,000 tyres to 5.2m tyres in
2017, with imports from China increasing by 120,000 tyres to 2.8m tyres offset by a similar decline in the
volume of imports from Brazil. Imports from Ecuador also declined by 86,000 tyres and from Peru by
85,000 tyres in 2017.
Unit truck tyre imports to Colombia increased by 2,000 tyres to 1.32m tyres in 2017. Truck tyre imports
from Thailand increased 90,000 tyres and from Japan by 26,000 tyres, offset by a decline in imports from
Brazil of 85,000 tyres and from Peru of 38,000 tyres.
Market demand for carbon black in Colombia is assessed to have been unchanged from 2016 volumes
in 2017 at an estimated 10,000mt, as detailed in the table below.
Estimated Market Demand for Carbon Black (Colombia) 2016 vs 2017 – mt

Production 37,000 49,000 32
Imports 2,000 2,000 -
Exports 29,000 41,000 41
Apparent Demand 10,000 10,000 -
Vehicle production in Colombia declined only marginally in 2017 versus 2016.
An increase in carbon black exports of 12,000mt to 41,000mt in 2017 versus 2016 is assessed to have
led to a similar increase in the volume of carbon black output in Colombia in 2017. As a result it is
estimated the Cabot carbon black plant in Colombia was probably operating at around 75% of nameplate
production capacity in 2017, up significantly from 2016. Cabot is believed to use its Colombian plant as a
swing plant increasing supply to export markets as and when demand warrants. The upturn in exports
from Colombia largely reflects an increase in exports to Costa Rica in 2017. A continued recovery in the
Brazilian carbon black market, together with new tyre production capacity coming on stream in Mexico
could drive Cabot’s Colombian carbon black to full operating rates in the next year or so.
Carbon black exports from Colombia increased by 11,850 to 41,000mt in 2017 versus 2016, as detailed
in the table overleaf.
Carbon black exports to Costa Rica increased by 7,800mt to 9,200mt in 2017. It seems probable that
Cabot won larger contracted volumes of carbon black with Bridgestone for its tyre plant in Costa Rica in
2017, having supplied only 1,780mt of carbon black to the Costa Rican market in 2016 from its plant in
Colombia. Carbon black exports to Ecuador also increased by 2,000mt to almost 9,200mt in 2017. By
contrast carbon black exports from Colombia to Brazil declined by 2,000mt to 9,100mt in 2017 probably
reflecting the upturn in demand in that market this year.

Carbon Black Exports (Colombia) 2016 vs 2017 – mt
Destination 2016 2017 Average Export Price

US$/mt 2017
Costa Rica 1,403 9,203 800
Brazil 11,219 9,177 872
Peru 8,613 8,123 772
Ecuador 3,786 6,395 847
Mexico 1,764 2,645 803
Chile 1,765 2,150 804
Belgium 138 1,508 813
United Kingdom 23 854 614
Indonesia 0 500 920
Spain 0 340 950
India 85 143 880
United States 23 52 3,941
UAE 21 25 731
Other 424 4 -
Total 29,264 41,119 -
Carbon black exports to the US market from Colombia increased to 52mt in 2017, probably representing
specialty carbon black grades given the high average price of US$3,941/mt. Cabot which operates the
single carbon black plant in Colombia might have been expected to increase exports to the US market in
2017 or 2018 as carbon black supply in that market has tightened. However, there were no traced imports
of carbon black into the US from Colombia in Q1 2018.
Carbon black imports to Colombia declined by 450mt mt to 1,950mt in 2017 versus 2016, as detailed in
the table below.
Carbon Black Imports (Colombia) 2016 vs 2017 – mt

US$/mt 2017
Venezuela 693 576 692
Brazil 373 553 1,920
China 722 376 1,597
US 133 175 3,666
Germany 121 102 5,049
South Korea 106 82 1,347
France 28 37 2,936
Russia 78 43 803
Canada 0 3 2,712
Other 154 4 -
Total 2,408 1,951 1,804
Carbon black prices in the Andean region are reported to be price in the range US$800-825/mt for grade
N326 tread grade carbon black on a delivered basis.

Western Europe
Italy
The Italian economy increased by 1.5% year on year in 2017 up from 0.9% in 2016, largely driven by
increased consumer spending, with the economy expected to increase at a similar rate in 2018.
Passenger car sales in Italy increased by 6.5% to 171,000 vehicles in April from 161,000 vehicles in the
same month in 2017. Cumulatively passenger car sales in Italy have increased by 1.8% to 2m vehicles in
the first four months of 2018 versus 2017. In 2017 passenger car sales in Italy increased by 7.9% or by
145,000 vehicles to 1.97m vehicles.
Across Western Europe passenger car sales increased by an exceptional 9% to 1.22m vehicles in April,
driven by an 8% increase in sales in Germany and a 9% increase in France. Cumulatively, passenger
car sales increased by 1.8% in Western Europe in the first four months of 2018 to 5.14m vehicles,
equivalent to an increase of 90,000 vehicles year on year. On an annualised basis passenger car sales
were 14.7m vehicles in the first four months of 2018, from 14.3m vehicles in the same period in 2017.
This would suggest an annual increase in passenger car sales of around 420,000 vehicles in Western
Europe in 2018.
Vehicle production in Italy, increased by 3% or by 39,000 vehicles to 1.14m vehicles in 2017 versus
Vehicle Production (Italy) 2015 vs 2016 vs 2017 – 000’s
Vehicle 2015 2016 2017 % Change 2017

Passenger Car 663 713 742 4
Light Truck 317 344 332 -3
Heavy Truck 33 45 67 48
Total 1,013 1,102 1,141 3
Italy’s single car maker, Fiat Chrysler reported a 4.8% increase in passenger car sales in Europe in 2017
to 1.15m vehicles, representing an increase of 53,000 vehicles from 2016. Almost 50% of Fiat Chrysler’s
sales volumes in Europe were in the Italian market. The company also reported a 5% increase in light
commercial vehicle sales in Europe to 335,000 vehicles in 2017. Fiat’s passenger car sales are largely
driven by small passenger cars such as the Fiat 500. However, Fiat Chrysler’s strategy is to revitalise its
premium brands and particularly Alfa Romeo, which is central to its ability to maintain and increase light
vehicle production in Italy. The company reports sales of Alfa Romeo branded vehicles increased by
almost 30% in 2017, due to the introduction of the Stelvio sports utility vehicle and production of the Jeep
branded Compass model, which the company also exports to the US market. Across the EU registrations
of Alfa Romeo branded vehicles increased by 27% to 82,000 vehicles in 2017 versus 2016, and sales of
Jeep branded vehicles increased by 3% to 105,000 vehicles in 2017. By contrast sales of Fiat branded
vehicles increased by 4% or by 30,000 vehicles to 768,000 vehicles. This would suggest Fiat Chrysler’s
strategy to shift its light vehicle production in Italy towards premium branded models of Alfa Romeo and
Jeep will happen over a long timescale. The company is reported to have reduced output of Alfa Romeo
models in Italy in Q4 2017 after China implemented strict new import rules which led to lower export sales
to China. Earlier in the year the company reduced output of its Fiat 500X and Jeep Renegade models at
its Melfi plant laying off workers for 21 days. The company’s reliance on sports utility vehicles models
from both Alfa Romeo and Jeep will probably be key models driving any growth in the company’s sales
and vehicle production in Italy in 2018. On this basis it seems further growth in vehicle output in Italy in
2018 will be modest. In addition Fiat is to phase out production of its Punto model from its large Melfi
plant, and has not announced a replacement model, which will negatively impact passenger car
production in Italy this year.
Passenger car tyre demand in Europe declined by 13% year on year in the OE sector and by 7% in the
replacement market in March, albeit from a high base comparison in Q1 2017 when demand was pulled
forward ahead of tyre selling price increases in April. Cumulatively, passenger car tyre demand in the OE
market declined by 3% in the OE sector and by 2% in the replacement market in Q1 2018 versus Q1
2017.

Truck tyre demand in Europe increased by 1% year on year in March but declined by 11% in the
replacement market in part due to one fewer selling day in March 2018. Cumulatively truck tyre demand
increased by 7% in the OE market in Q1 2018 versus Q1 2017, but declined by 2% in the replacement
market.
The EU has announced provisional import duties on four tyre companies exporting truck tyres to the EU
from China. It is to impose a provisional duty of 151% on Aeolus Group; a 98.7% duty on Giti Group; an
80.4% duty on Hankook Tire; and a 166% duty on Xingyuan Group. Prior to the EU imposing import tariffs
upon Chinese produced truck tyres, tyre importers have been adding 37% to the price of Chinese
produced tyres, in line with official advice.
The EU’s findings indicate imports of truck tyre from China increased by 32% since it announced its anti
dumping investigation or by 1.1m tyres to around 4.6m tyres, increasing the market share of Chinese
truck tyres to 21% in Europe from 17%. Imports of light and heavy truck tyres from China to the EU
reached 4.37m tyres in 2016 up from 1.4m tyres in 2010. The high level of tariffs imposed by the EU
should significantly reduce the volume of imported tyres from China if they are upheld.
Michelin reported a 2.3% decline in tyre sales volumes globally in Q1 2018. However, the decline
followed a 7.3% increase in volumes in Q1 2017 as demand was pulled forward ahead of tyre selling
prices in April 2017. A two year comparison from Q1 2016 indicates the company’s sales volumes
increased by 5% in Q1 2018. Passenger car tyre sales volumes were flat versus Q1 2017 globally with
lower demand from OE markets increasing by 3%, while demand in replacement markets was stable
versus Q1 2017. Michelin is forecasting a 3.5% increase in passenger car sales volumes in each of the
three remaining quarters in 2018. The company reports demand for 18” diameter or above Michelin
branded tyres increased by 7% year on year in Q1 2018 in line with the market, and represented 37% of
all Michelin branded passenger car tyre sales in Q1 2018 from 33% in Q1 2017.
Michelin reported truck tyre sales volumes were flat in Q1 2018 versus Q1 2017, with demand from the
OE sector increasing by 5% driven by strong demand in North America, while replacement demand
declined by 2% compared to an 8% increase in demand in Q1 2017. Strong freight volumes especially in
Europe and North America will contribute to a 1.5% volume in truck tyre sales growth for Michelin in Q3
and Q4 2018.
In the specialty tyre market Michelin reports demand increased by between 5% and 7% driven by a 7% to
10% increase in the mining sector, and strong demand from OE sectors for earthmover and agricultural
tyres.
Michelin is establishing a high technology materials business unit to further develop high technology
polymer products. The company is to acquire the UK company Fenner Plc, which is a manufacturer of
conveyor belts and reinforced polymer products for mining and industrial markets. Michelin intends to
support the growth and development of technical materials, and is to extend the range of markets it
supplies from industrial products, consumer goods to medical products. Michelin reports that mastering
high technology materials is the key to creating value in the coming years.
Goodyear reported a 5% decline in unit tyre sales from its Europe, Middle East and Africa business in Q1
2018 to 14.7m tyres from sales of 15.5m tyres in Q1 2017. Unit tyre sales to the OE market declined by
16% year on year, largely due to lower sales of tyres with a diameter of less than 17”, while sales to the
replacement market declined by 2% year on year.
Goodyear reported weak demand for consumer tyres in Europe for European tyre manufacturers declined
by 5% with demand for the overall market declining by 2%. Demand for tyres with a diameter of 17” or
above increased by 1% for tyre companies that are members of the European tyre association, offset by
a 7% decline in demand for tyres with a diameter of less than 17”. By contrast tyre companies that are
not members of the European tyre association, represented by importers increased by 5% year on year in
Q1 2018.
Goodyear reported its replacement tyre volumes declined by 1% and it outpaced the industry in its sales
of larger diameter tyres. In addition there was a slower than expected start to the summer tyre selling
season due to cold weather during the quarter. Tyre dealers continued to sell winter tyres but did not
restock, suggesting low inventories of winter tyres for the start of the next winter tyre selling season.
Goodyear expects strong demand in the European consumer replacement markets for Q2 and Q3 2018,
and significant increases in demand from the OE market. Indeed the company reports sales volumes in
April have been strong.

Goodyear is forecasting demand for consumer tyres in the replacement market in Europe will be flat in
2018 versus 2017, or at best increase by 2%, while consumer OE tyre demand will be flat versus 2017 or
at best increase by 2%. The company is forecasting an increase in demand in the truck tyre replacement
market of between 2% and 4% in 2018, and a 1% to 3% increase in the truck tyre OE market in 2018.
Goodyear reported operating income from its Europe, Middle East and Africa business declined by 22%
year on year to US$78m in Q1 2018, with its operating margin declining to 5.9% of sales from 8.2% of
sales due to higher raw material costs, and lower sales volumes.
Passenger car and light truck tyre demand for European tyre producers in Italy is assessed to have
declined by around 5% or by 1.4m tyres to an estimated 24.2m tyres in 2017 versus 2016, as detailed in
the table below.
Estimated Passenger Car & Light Truck Tyre Demand (Italy) 2015 vs 2016 vs 2017 – 000’s
Passenger Car Tyre 2015 2016 2017 % Change 2017

OE 3,300 3,600 3,700 2
Replacement 21,500 22,000 20,500 -6
Total 24,800 25,600 24,200 -5
Passenger car tyre demand from the OE market has been estimated based upon the increase in light
vehicle production in Italy in 2016 and 2017. Replacement car and light truck tyre demand has been
estimated based upon a graphical representation of demand from the European tyre association. Weaker
domestic demand for passenger car tyres in Italy in 2017, also led to the decline in the volume of
passenger car tyre imports, as detailed in the table below.
Passenger Car Tyre Imports, Exports and Net Trade (Italy) 2015 vs 2016 vs 2017 – 000 mt
Passenger Car Tyre 2015 2016 2017 % Change 2017

Imports 284 296 281 -5
Exports 170 177 183 2
Net Trade 114 119 98
Imports of tyres from outside of the EU were unchanged from 2016 volumes in 2017. Lower domestic
demand for passenger car tyres in Italy from European tyre manufacturers also probably drove the
increase in export volumes of 2% or 6,000mt of tyres to 183,000mt in 2017 versus 2016. This would
suggest that passenger car tyre output in Italy did not increase, or at least significantly in 2017.
Michelin is implementing a €180m investment programme to significantly develop passenger car, light
truck and heavy truck production volumes at its Cuneo and Alessandria sites in Italy by 2020. The Cuneo
plant is Michelin’s largest passenger car and light truck tyre plant in Europe, and is also one of the largest
of semi-finished product production sites in Europe. Michelin is planning to increase passenger car and
light truck tyre production at the Cuneo plant by 20% by 2020, by shifting production towards high and
ultra high performance tyre production.
Truck tyre demand in Italy is assessed to have increased significantly in 2017, driven by an exceptional
48% increase in heavy truck output to 67,000 trucks equivalent to an increase of 22,000 trucks. By
contrast demand for truck tyres from European tyre manufacturers in the truck tyre replacement market in
Italy is assessed to have declined marginally in 2017 versus 2016, as detailed in the table below.
Estimated Truck Tyre Replacement Demand (Italy) 2015 vs 2016 vs 2017 – 000’s
Truck Tyre 2015 2016 2017 % Change 2017

OE N/a N/a N/a -
Replacement 1,180 1,190 1,170 -1.6
Total 1,180 1,190 1,170 -1.6

Despite the increase in heavy truck output of 22,000 trucks in 2017 in Italy, the volume of truck tyres
imported into the country declined by 8,000mt to 140,000mt, as detailed in the table below.
Truck Tyre Imports, Exports and Net Trade (Italy) 2015 vs 2016 vs 2017 – 000 mt
Truck Tyre 2015 2016 2017 % Change 2017

Imports 142 148 140 -5
Exports 113 92 92 -
Net Trade 29 56 48 -14
This would suggest that the increase in demand for heavy trucks tyres in Italy was met by an increase in
domestic truck tyre output in 2017.
Market demand for carbon black in Italy is assessed to have increased by up to 5,000mt in 2017 versus
Estimated Market Demand for Carbon Black (Italy) 2015 vs 2016 vs 2017 – mt
Carbon Black 2015 2016 2017 % Change 2017

Production 215,000 197,000 231,000 17
Imports 62,000 85,000 74,000 -13
Exports 129,000 130,000 148,000 14
Apparent Demand 148,000 152,000 157,000 3
The increase in market demand for carbon black is assessed to have been driven by an increase in truck
tyre demand from the OE sector as heavy truck output in Italy increased by an exceptional 22,000 trucks
in 2017. Vehicle output in Italy increased by 39,000 vehicles in 2017. These factors driving increased
demand for carbon black could in the worst case have been offset by a reduction in domestic passenger
car tyre output in Italy. Demand for passenger car tyres from European tyre manufacturers in Italy is
assessed to have declined by around 1.4m tyres based upon reduced demand in the domestic
replacement tyre market, which would only partially been offset by an increase in passenger car tyre
exports from Italy of 6,000mt, or around 700,000 tyres in 2017.
A reduction in the volume of carbon black imports into Italy of 11,300mt to 74,000mt, and a substantial
increase in carbon black exports from Italy of 18,000mt suggests carbon black output in Italy increased by
around 30,000mt to an estimated 230,000mt in 2017. The decline in imports and increase in carbon black
exports in Italy indicates a net outflow of 29,000mt of carbon black in 2017 which will have clearly
contributed most to the increase in carbon black output in 2017. This would suggest the carbon black
industry in Italy was operating at or close to full operating rates in 2017, even if there was no increase in
domestic demand for carbon black last year.
Orion Carbons is to invest in a new specialty carbon black production line at its plant at Ravenna in Italy,
to supply the coatings; polymers and printing applications. The new line is expected to come on stream in
Q4 2019.
Carbon black imports to Italy declined by 11,300mt to 74,000mt in 2017 versus 2016, as detailed in the
table overleaf.
The decline in the volume of imports was largely due to an exceptional decline in imports from the Slovak
Republic of 19,000mt to 15,800mt in 2017. It is possible that the exceptionally large volume of carbon
black from the Slovak Republic in 2016 was erroneous trade data. On the other hand it could have
represented an increase in the volume of carbon black from Russian producers shipped via a distributor
in the Slovak Republic. In this case the volume of product from Russia imported to Italy via the Slovak
Republic declined significantly in 2017, possibly reflecting a narrowing of the price differential between
Russian produced carbon black and that of other European producers. On the other hand carbon black
imports from Hungary increased by almost 6,000mt and from Poland by 2,300mt in 2017. It seems
probable that some of the product imported from these two countries represented Russian produced
product shipped via distributors to Italy via Poland or Hungary.

Carbon Black Imports (Italy) 2015 vs 2016 vs 2017 – mt
Source 2015 2016 2017 Average Import

Price €/mt Jan 2018
Slovakia 11,085 35,096 15,814 935
Poland 6,346 10,334 12,674 955
Germany 10,643 7,753 10,362 1,518
Hungary 2,191 1,697 7,683 820
Venezuela 2,389 4,322 4,931 -
Belgium 2,956 2,437 2,904 2,707
Canada 1,683 1,722 2,410 1,226
France 5,929 7,777 2,366 748
Austria 1,290 1,708 1,849 821
Russia 2,208 1,553 1,831 769
South Korea 1,893 1,338 1,566 921
Netherlands 2,725 1,890 1,554 5,319
Spain 212 294 1,398 1,148
Czech Rep 1,818 2,282 859 785
US 556 396 635 3,265
Brazil 0 0 600 -
India 2,600 1,701 574 -
China 2,023 703 426 2,134
Ukraine 1,079 1,019 382 927
Slovenia 473 0 46 -
Other 1,803 1,636 3,478
Total 61,902 85,658 74,342
Carbon black imports to Italy from France also declined by 5,400mt to 2,300mt probably reflecting tighter
supply of carbon black in France following the closure of the Orion Carbons carbon black plant at the end
of 2016. By contrast carbon black exports to Italy from Germany increased by 2,600mt to 10,300mt in
2017, despite the closure of the Birla Carbons carbon black plant in Germany in Q1 2016.
Carbon black exports from Italy increased by an exceptional 18,000mt to 148,000mt in 2017 versus 2016,
as detailed in the table below.
Carbon Black Exports (Italy) 2015 vs 2016 vs 2017 – mt
Destination 2015 2016 2017 Average Import

Price €/mt Jan 2018
Germany 27,799 29,821 33,385 954
Turkey 29,903 26,754 32,296 1,119
Spain 20,007 18,459 21,855 837
UK 12,881 11,851 12,562 1,145
France 5,104 5,103 6,939 900
Belgium 5,560 3,587 6,378 840
Poland 2,739 4,955 5,897 936
Czech Rep 1,893 2,207 3,598 713
India 1,603 1,952 3,513 955
Switzerland 1,899 2,133 3,311 1,206
Thailand 4,590 5,421 2,737 -
Romania 1,252 5,234 2,639 949
Netherlands 3,330 1,815 2,350 998
Hungary 2,659 2,769 2,272 925
Bulgaria 759 1,599 1,630 704
US 428 525 1,320 890
China 854 906 1,234 1,015
Greece 811 949 807 995
Austria 300 529 131 1,061
UAE 181 186 304 2,642
Portugal 692 341 518 799
Other 3,818 2,934 2,601 -
Total 129,062 130,034 148,277 -

Carbon black exports from Italy to Turkey increased by 5,500mt in 2017; to Germany by 3,500mt and to
Spain by 3,400mt in 2017 versus 2016. Exports to Belgium increased by 2,800mt and to France by
1,800mt in 2017 versus 2016. Indeed carbon black exports to other West European markets increased by
15,000mt to 90,000mt in 2017 versus 2016, accounting for most of the increase in carbon black exports
from Italy in 2017, but still down from export sales of 129,000mt in 2015. The closure of carbon black
plants in Germany and France in 2016, has clearly led to a tightening of carbon black supply in Western
Europe. Italy remains the single West European market where there have been carbon black closures in
Western Europe, with production capacity to be increased with the addition of the new Orion Carbons
specialty production line.
Monthly adjusted carbon black contract prices are assessed to have increased marginally in April, based
upon an increase in the monthly average spot price of 1% sulphur fuel oil in northern Europe increasing to
US$55.15pb in February from US$54.40pb in January 2018.
Central Europe
Slovak Republic
Passenger car sales in the Slovak Republic increased by 6% year on year in Q1 2018 to 24,300
vehicles from 22,800 vehicles in the same period in 2017, despite a 5% decline in sales volumes in March
2018. In 2017 passenger car sales in Slovakia increased by 9% or by 8,000 vehicles to a record 96,000
vehicles.
Passenger car production in Slovakia declined by 3% year on year to just over one million vehicles in
2017 versus 2016, as detailed in the table below.
Vehicle Production (Slovak Republic) – 2016 vs 2017 - mt

Passenger Car 1,041 1,003 -3
Light Truck 0 0
Heavy Truck 0 0
Total 1,041 1,003 -3
The decline in output in 2017 was largely due to a reduction in output of 7% equivalent to a reduction of
27,000 vehicles to 361,000 vehicles by Volkswagen, as detailed in the table below.
Vehicle Production by Manufacturer (Slovak Republic) – 2016 vs 2017 – 000’s
Vehicle Producer 2016 2017 % Change 2017

Volkswagen 388 361 -7
Kia 339 335 -1
Peugeot Citroen 315 335 6
Total 1,041 1,003 -3
In 2017 Volkswagen started the production of the Porsche Cayenne sports utility vehicle, and the Audi Q8
sports utility vehicle at its Slovak plant. However, workers at the VW plant went on strike for six days in
mid 2017 over pay and won a 14% pay increase over two years, reflecting tight labour market conditions
in the Slovak Republic. Industrial action at the plant will contributed to lower output by VW in the Slovak
Republic last year.
The Korean car maker Kia also reported a 1% decline in passenger car output to 335,000 vehicles in
2017, and is forecasting a further decline in output of 2.3% to 328,000 vehicles in 2018. This is due to
uncertain market conditions and the preparation of the plant for the production of a new model. By
contrast Peugeot Citroen reported a 6% increase in passenger car output to a record 335,000 vehicles in
2017.
The automotive industry association in Slovakia is forecasting passenger car output will exceed 1.025m
vehicles in 2018, suggesting an increase in output of at least 20,000 vehicles year on year. The increase
in output will be due to the startup of the Jaguar Land Rover plant in Slovakia this year.

Passenger car production in the Slovak Republic is forecast to increase by around 350,000 vehicles per
annum to 1.35m vehicles per annum by 2020, following the start up of the Jaguar Land Rover plant in the
Slovak Republic in 2018. The new plant will produce sports utility vehicles and has an annual production
capacity of 300,000 vehicles.
Unit tyre production in the Slovak Republic is reported to have increased by 6% or by 1.1m tyres to a
record 17.8m tyres in 2017 versus 2016, as detailed in the table below.
Estimated Unit Tyre Production (Slovak Republic) 2014 - 2017 – 000’s
Vehicle 2014 2015 2016 2017 % Change

2017
Passenger Car 13,000 14,000 14,000 15,000 7
Truck 2,600 2,500 2,700 2,800 3
Total 15,600 16,500 16,700 17,800 6
The above production data is from reported tyre output by the single tyre producer in the Slovak Republic,
Continental AG. In 2017 Continental AG forecast an increase in unit tyre production capacity at its Slovak
plant of 500,000 tyres per annum by 2020/21, as part of the company’s global unit tyre production
capacity of 37m tyres per annum. The company reports that its labour costs at its Slovak tyre plants were
38% of those in Germany in 2017.
Continental AG reported global vehicle production and the replacement market for passenger car tyres
both declined by 1% year on year in Q1 2018.
Market demand for carbon black in the Slovak Republic is assessed to have increased by 16% to
101,000mt in 2017 versus 2016, as detailed in the table below.
Estimated Market Demand for Carbon Black (Slovak Republic) 2016 vs 2017 - mt

Production 0 0 -
Imports 91,000 105,000 15
Exports 4,000 4,000 -
The increase in market demand for carbon black was driven by an increase in unit tyre production of 1.1m
tyres to a record 17.8m tyres, as reported by the single tyre maker Continental AG in the Slovak Republic
in 2017. An increase in unit tyre production capacity of 500,000 tyres per annum by 2020/21, should drive
further increases in market demand for carbon black from the tyre sector. In addition the ramping up of
passenger car output by Jaguar Land Rover in the next three years could drive an increase in vehicle
output of 300,000 vehicles in the Slovak Republic to around 1.3m vehicles per annum depending upon
market conditions.
Carbon black imports to the Slovak Republic increased by 13,800mt to almost 105,000mt in 2017 versus
Carbon Black Imports (Slovak Republic) 2016 vs 2017 – mt

€/mt Jan 2018
Russia 35,597 58,794 594
Hungary 21,390 26,903 842
Germany 11,026 13,507 1,026
Czech Repub 1,737 1,987 650
Netherlands 820 965 966
France 1,008 639 543
Poland 19,220 626 594
Other 233 1,468 -
Total 91,031 104,889

The increase in the volume of imports was driven by an exceptional increase in imports of 23,000mt from
Russia, and by 5,500mt from Hungary in 2017. It seems probable that Continental AG is sourcing most of
its carbon black requirements for its passenger car and truck tyre production from Russian carbon black
producers. Given the significant increase in the volume of imports from Russia, at a faster rate than the
increase in demand for carbon black in 2017, Continental AG probably increased its sourcing of Russian
carbon black in 2017. Carbon black imports from Hungary also increased by 5,500mt to 26,900mt in
2017, some of which could also have been Russian product shipped via the Taurus rail terminal in
northern Hungary, as well as the Birla Carbon carbon black plant in Hungary. By contrast carbon black
imports from Poland declined by 19,200mt in 2017, most of which was probably Russian produced
carbon black probably suggesting a change in distributor away from Polish distributors for the Slovak
market in 2017. Very low average import prices of carbon black into the Slovak Republic for January 2018
probably reflect highly competitive market conditions supplying major tyre companies in Central Europe.
Carbon black exports from the Slovak Republic were largely unchanged from 2016 volumes in 2017, as
detailed in the table below.
Carbon Black Exports (Slovak Republic) 2016 vs 2017 - mt
Destination 2016 2017 Average Import Price

€/mt Jan 2018
Italy 1,563 1,696 656
Czech Repub 1,073 1,057 763
Poland 102 528 -
Hungary 444 343 -
Romania 135 266 672
Serbia 135 21 1,720
Other 390 41 -
Total 3,842 3,952
Carbon black prices in Central Europe are currently reported to be priced in €870/mt to €900/mt on a
delivered basis for 300 series tread grades.

Middle East
Egypt
The re-election of President Sisi in March will see a continuation of the policies of the International
Monetary Fund, which have led to cuts in Government subsidies, the floating of the Egyptian pound, and
the launch of several pro business policies. Government spending is being limited by the country’s
adherence to its agreement with the International Monetary Fund, which requires it to reduce its large
budget deficit. However, pro-business reforms are expected to lead to a sharp increase in business
investment in 2018. A recovery in tourism, and the start of natural gas production at the Zohr natural gas
field are also expected to contribute to the increase in economic growth this year. As a result the Egyptian
economy is projected to increase by 4.7% in 2018, and by 4.9% in 2019.
Light vehicle sales in Egypt declined by 24% to 131,000 vehicles in 2017, as inflation, huge vehicle
price increases, higher fuel costs and duties negatively impacted demand for new vehicles. New car
prices increased by up to 120% in some instances in Egypt in 2017. As a result light vehicle sales are
expected to remain well below the peak of 278,000 vehicles sold in 2015 this year.
GB Autos, which is believed to be the largest vehicle assembler in Egypt with a 30% market share
reported passenger car sales in Egypt declined by 54% or by 32,500 vehicles, to 99,500 vehicles in 2017,
versus sales volumes of 132,000 vehicles in 2016.
Most recent data for January 2018, indicates new vehicle sales in Egypt increased by 10% year on year
to 10,300 vehicles from 9,400 vehicles in the same month in 2017. The increase in vehicle sales was
driven by a 60% increase in truck sales to 2,500 units from 1,500 units in January 2017, and a 14%
increase in bus sales to 1,050 vehicles. By contrast passenger car sales declined by 2% to 6,800 vehicles
in January from 6,900 vehicles in January 2017.
General Motors’ Chevrolet brand remained the best selling brand in Egypt in 2017, with sales of 29,300
vehicles in 2017, 4% below 2016 volumes, while Hyundai reported a 43% decline in sales volumes in
2017 to 21,900 vehicles.
One forecast suggest new car sales will remain around 130,000 vehicles in 2018, with a recovery in
demand conditional upon lower interest rates. Significant increases in selling prices of new cars in 2017
are beyond the budget of most Egyptians. An anticipated appreciation of the Egyptian Pound in 2018
would contribute to lower vehicle selling prices.
GB Autos believes consumers have adapted to higher vehicle selling prices and that demand for new
vehicles will start to increase in 2018. GB Autos expects the passenger car market in Egypt will be in the
region 120,000 vehicles in 2018, from sales of 99,500 vehicles in 2017, with it being able to control a 30%
share of the market.
Commercial vehicle sales in Egypt declined by 3% to 47,600 vehicles in 2017 from 49,300 vehicles in
2016, remaining well below the peak of 75,600 vehicles sold in 2014. GB Autos reported a 50% decline in
truck sales in 2017 to 750 trucks from sales of 1,550 trucks in 2016.
Vehicle production in Egypt is reported to have been unchanged from 2016 volumes in 2017, as
Vehicle Production (Egypt) 2015 vs 2016 vs 2017
Vehicle 2015 2016 2017 % Change 2017

Passenger Car 12,000 11,000 10,000 -9
Light Truck 0 0 0
Heavy Truck 24,000 25,000 26,000 5
Total 36,000 36,000 36,000 -
This data does not include all vehicle assembly in Egypt. Sales of domestically assembled vehicles in
Egypt is reported to have declined by 32% to 53,600 vehicles in the first nine months of 2017, suggesting
the volume of locally assembled vehicles declined by around 30,000 units to around 70,000 vehicles in
2017, from an estimated 105,000 vehicles in 2017. General Motors remained the market leader in the

Egyptian automotive market selling 29,000 vehicles in 2017, most of which are believed to have been
assembled in Egypt.
Most recent data for January 2018 indicates sales of locally assembled passenger cars increased by 25%
year on year to 3,500 vehicles, from 2,800 vehicles in the same month in 2017. By contrast the volume of
imported vehicles declined by 21% to 3,200 vehicles.
Sales of domestically assembled trucks increased by increased by 58% year on year in January to 2,170
trucks from 1,300 trucks in the same month in 2017, while the volume of imported trucks increased by
100% year on year to 340 trucks in January.
It is suggested that light vehicle demand and local assembly will not stabilise before 2018, and start to
increase modestly before 2019 or 2020.
There are 19 passenger car assembly plants in Egypt with the capacity to produce 300,000 passenger
cars and buses annually, with around 150 component supply companies.
The trade agreement between the EU and Egypt has resulted in a gradual decline in the import tariffs
upon passenger cars imported into Egypt from the EU. The duty equated to 40% of the selling prices of a
1.6litre vehicle produced in the EU in 2017, and a 10% decline in the tariff will only equate to a 4% decline
in the price of a passenger car imported from the EU in 2018. However, the import duty on EU produced
cars declines to zero from the start of 2019 which will result in fully assembled imported vehicles from the
EU becoming more cost competitive than those produced in Egypt.
The Egyptian Government reports that new investment in the automotive industry in Egypt is around
US$3bn, of which US$1.6bn is in the automotive industry, and US$1.4bn in the component supply
industry. Domestically produced components accounted for 45% of locally assembled vehicles in 2017,
with the Government’s objective of increasing it to 48%, but to 70% for light trucks over an eight year
period. As yet the Egyptian Government has yet to announce its long awaited policy for the Automotive
Industry, in which it is expected to provide policies, which would develop the Egyptian automotive industry
into a regional production hub in the context of increased competition from the EU from 2019. It remains
to be seen whether the automotive industry in Egypt can achieve sufficient scale from an existing installed
production capacity of around 250,000 vehicles per annum to become internationally competitive. Egypt
has the largest population in the Middle East, but car ownership levels remain the lowest at just 32 cars
per thousand population compared to 77 cars per thousand population in Iraq for example.
The Korean car maker Kia is to invest US$240m in Egypt over a five year period, with the company
expected to employ up to 1,000 workers. The new plant will have an annual production capacity of 15,000
vehicles, producing one model, the Sorrento with a second model to be assembled after a year of
operation.
The Russian car maker AvtoVaz is to resume production of Lada vehicles in Egypt, and is to assemble its
Granta subcompact passenger car in Egypt this year. AvtoVaz’s Egyptian partner has the capacity to
assemble 4,500 vehicles per annum, with the possibility to increase capacity to between 8,000 to 9,000
vehicles.
The Chinese car maker SAIC Motor is considering establishing a vehicle assembly operation in Egypt,
from where it could also supply other North Africa markets, as Egypt has privileged market access
through free trade agreements.
The share riding service Uber is to invest US$20m over five years to offer a share riding bus service in
Egypt.
The truck tyre plant in Egypt previously owned by Pirelli, has been sold to the Chinese tyre company
Aeolus, and is now known as the Prometeon Tyre Group. The new company continues to produce Pirelli
branded truck, bus tyres as well as off road and tyres for agricultural vehicles. The Egyptian plant is one
of four operated by the company, with one in Turkey and two plants in Brazil. It is possible the new
ownership of the business will pursue more tyre sales volumes more aggressively, with less priority on
profit margins as was the case under the former owner of the business Pirelli.
GB Autos, one of the largest sellers of passenger cars in Egypt has been granted preliminary approval to
construct a tyre plant in the Suez Canal Economic Zone. The company already has its own tyre brand
and reported sales revenues from its tyre business have increased from E£203.2m (US$11.5m) in 2015,
to E£462.5m (US$26m) in 2016 and E£699m (US$39.5m) in 2017. GB Autos reports sales of tyres is one

of the company’s fastest growing markets. However, the small scale of tyre sales revenues suggests the
company is far from achieving sufficient scale of business to justify investing in a tyre plant of its own in
Egypt.
Market demand for carbon black in Egypt is estimated to have been stable or declined marginally by
1,000mt to 8,000mt in 2017 versus 2016, as detailed in the table below.
Estimated Market Demand for Carbon Black (Egypt) 2016 vs 2017 – mt
Production 213,000 209,000 -2

Imports 2,000 1,000 -
Exports 206,000 202,000 -2
Apparent Demand 9,000 8,000 -11
The decline in market demand for carbon black is assessed to have been due to weaker economic
conditions in the Middle East, which could have impacted truck tyre output at the former Pirelli plant in
Egypt 2017.
Carbon black output in Egypt is assessed to have declined by 2% or by around 5,000mt to an estimated
209,000mt in 2017 versus 2016, based upon a traced decline in volume of carbon black exports from
Egypt to Europe in 2017 versus 2016. Most of the decline in carbon black output is assessed to have
been to the Netherlands in 2017 to where exports are assessed to have declined by 14,000mt. This was
offset by an increase in exports to India of 8,800mt in 2017, where carbon black supply is tight.
Carbon black production capacity at the Alexandria Carbon Black plant in Egypt is assessed to be in the
region 220,000mt per annum following the closure of one production line in 2016. On this basis the
Alexandria Carbon Black in Egypt is assessed to have been operating at or close to full operating rates in
2017.
Carbon black exports from Egypt are assessed to have declined by 3,500mt to 202,000mt in 2017 versus
2016. The table below details traced carbon black exports for those countries importing carbon black from
Egypt for 2017 versus 2016.
Carbon Black Exports (Egypt) 2016 vs 2017 – mt
Destination 2016 2017 Average Traced

Import Price US$/mt
Jan 2018
France~ 61,873 53,618 970
Spain 37,289 43,711 1,070
UK~ 20,163 18,787 1,250
Germany~ 11,649 14,053 1,360
Netherlands 22,193 8,391 -
Italy~ 2,581 2,968
Finland 1,131 2,823 1,060*
Ireland 1,830 1,079 -
Hungary 1,399 392 1,270
Czech Rep 212 299
Greece 56 29
Romania 93 18 1,210*
Total EU 160,500 146,200
Turkey 39,536 41,508 1,120
Tunisia 110 1,862 -
Israel 830 520 940
Ethiopia 778 412 990
Algeria 40 132
Burkino Faso 41 87
Kenya 220 0
Morocco 500 0
Middle East & Africa 42,000 44,500

Total
India 2,816 11,685 1,000
Asia Total 2,800 11,700
Argentina 108 102
Chile 0 69
Brazil 731 0
Americas Total 840 170
Grand Total 206,100 202,500
*Average monthly price Dec 2017
~ Including product shipped via Belgium where ACB has a distribution depot.
Carbon black exports from Egypt to Europe are assessed to have declined by around 14,000mt to an
estimated 146,000mt in 2017 versus 2016. Carbon black imports to the EU from Egypt have been
calculated by adding direct imports from Egypt to those for imports classified as suppressed country,
which are believed largely to represent imports to the EU from Egypt. In addition imports of carbon black
from Belgium from where the Egyptian carbon black producer operates a distribution depot, to other EU
markets have been included in the import volumes.
The decline in the volume of carbon black exports from Egypt to the EU in 2017 versus 2016, is assessed
to have been driven largely by a decline in exports to the Netherlands of 14,000mt in 2017. Carbon black
exports to France from Egypt are assessed to have declined by around 8,000mt to an estimated
53,000mt in 2017. This could reflect the overall volume of decline in market demand for carbon black in
France in the past two years, reflecting the closure of a passenger car tyre plant by Goodyear, and a
reduction in truck tyre production capacity by Michelin in France since 2015.
Carbon black exports from Egypt to the UK are assessed to have declined by around 12,000mt in the
past two years to an estimated 19,000mt in 2017. This reduction in exports volumes could reflect the
winding down of tyre production by Goodyear at its Wolverhampton plant and reductions in truck tyre
output by Michelin at its Ballymena plant in Northern Ireland ahead of the plant closure this year.
Carbon black exports to Germany from Egypt are assessed to have increased by 2,400mt to an
estimated 14,000mt in 2017 versus 2016, based upon the volume of carbon black imported to Germany
from Belgium in 2017. The increase in imports follows the closure of the Birla Carbon, carbon black plant
in Germany in Q1 2016, and could reflect increased supply to the German market from the Egyptian plant
in 2017.
Carbon black exports to the Middle East are assessed to have increased by 2,400mt to 44,500mt in 2017,
driven by an increase in exports to Turkey of almost 2,000mt year on year. Most recent data for January
2018 indicates an increase in exports to Turkey of 37% year on year to 4,600mt from 3,300mt in January
2017.
Carbon black exports to Latin America from Egypt almost ceased in 2017 from a peak of 8,000mt per
annum in 2008. Meanwhile exports to North America also ceased in 2016 having reached 4,000mt per
annum in recent years.
Traced carbon black imports to Egypt indicate a decline in the volume of product imported of Egypt of
500mt in 2017 versus 2016, as detailed in the table below.
Traced Carbon Black Imports (Egypt) 2015 vs 2016 vs 2017 – mt
Source 2015 2016 2017 Average Import

Price 2017
US$/mt
China 796 1,393 1,029 939
Germany 151 138 114 3,789
Russia 122 96 0 -
India 122 96 1 7,312
Italy 62 49 2 -
Belgium 52 24 212 -
Spain 12 0 8 -
US 44 0 0 -
Total 1,361 1,796 1,266 -
* February 2018 in Euros

The increase in imports was driven by an increase in imports from China of 200mt and from Russia of
115mt in the first six months of 2016.
The table below details traced carbon black feedstock exports from the US to Egypt for the first three
months of 2017.
Carbon Black Feedstock Exports from US to Egypt 2018 – Three Months only – FAS Port
Month Mt Price US$/pb E£/US$ Monthly

Exchange Rate* Feedstock Price
E£/Mt
January 33,300 63.72 17.67 1,125
February 32,300 60.00 17.64 1,058
March 0 0 17.59 -
Carbon black prices are currently reported to be in the region US$1,200/mt for carbon black grade N220
from Asia on a cif basis to a Middle Eastern Port, and around US$1,130/mt for grade N330.

Asia
Carbon Black Exports (China)

Carbon black exports from China increased by 21% or by 39,000mt to 220,000mt in the first three months
of 2018 versus 2017, as detailed in the table below.
Carbon Black Exports (China) 2017 vs 2018 – Three Months only - mt
Destination 2017 2018 Average Export

Price Q1 2018
US$/mt
Thailand 48,783 62,605 1,260
Indonesia 38,445 40,126 1,196
India 9,102 32,443 1,270
Vietnam 18,424 24,028 1,267
Japan 18,128 13,988 1,204
Taiwan 15,282 13,940 1,294
Malaysia 9,446 10,869 1,174
Philippines 3,970 3,297 1,325
Pakistan 2,091 3,128 1,324
Sri Lanka 2,538 3,055 1,342
Australia 1,473 2,107 1,235
Myanmar 699 1,043 1,349
South Korea 3,712 778 1,496
Singapore 404 472 1,461
Bangladesh 56 325 1,372
New Zealand 88 114 1,335
North Korea 86 71 925
Total Asia 172,727 212,389
Turkey 2,255 1,568 1,385
United Arab Emirates 597 1,205 1,266
Israel 419 551 1,292
Kenya 593 540 1,223
Nigeria 242 415 949
Egypt 499 269 685
South Africa 256 159 1,250
Iran 41 119 2,241
Morocco 29 58 1,813
Saudi Arabia 70 63 1,480
Total Middle East & Africa 5,001 4,947
Poland 28 1,139 1,140
United Kingdom 682 688 1,228
Belgium 383 352 1,741
Netherlands 80 140 1,675
Italy 44 111 2,549
Spain 77 106 1,639
Total Europe 1,294 2,536
Chile 528 382 1,043
Argentina 86 51 1,533
Canada 153 24 1,316
Colombia 136 22 2,316
Total Americas 1,441 751
Other 242 233
Grand Total 182,055 220,998

The increase in carbon black exports from China was driven almost exclusively by an increase in exports
to the rest of Asia of 39,600mt in Q1 2018. Carbon black exports from China to India increased by
23,000mt in Q1 2018, despite high tariffs upon Chinese produced carbon black in India, and reflecting
tight carbon black supply in that market. Carbon black exports from China to Thailand increased by
13,800mt to a record 62,000mt in Q1 2018, equating to an annualised rate of almost 250,000mt to
Thailand. Carbon black exports to Vietnam also reached record volumes of 24,000mt in Q1 2018. By
contrast carbon black exports to Japan declined by 4,100mt; to South Korea by 2,900mt and to Taiwan by
1,300mt in Q1 2018 versus Q1 2017.
Carbon black exports from China to the Middle East and Africa declined by 50mt to 4,900mt in Q1 2018,
due to a decline in exports to Turkey of 680mt.
Carbon black exports to Europe increased by 1,200mt to 2,500mt in Q1 2018, driven by an increase in
exports to Poland of 1,100mt.
Carbon black exports to the Americas declined by 700mt to 750mt in the first three months of 2018
versus 2017, due to a decline in exports of 260mt in Q1 2018. Indeed exports of Chinese carbon black to
the Americas are at negligible volumes, as Chinese carbon black is currently uncompetitive in North
American markets.
Hankook Tire, which operates a passenger car and light truck tyre plant in China reports shortages of
carbon black in China due to reduced output by the steel industry which has caused a sharp increase in
the FCC premium leading to a 38% increase in carbon black prices year on year in Q1 2018. Carbon
black prices in China are expected to stay in a stay in a similar range in 2H 2018.
Across Asia higher oil prices are reported to have led to an average fuel price in Singapore of US$372/mt
in March 2018 from US$317/mt in Q1 2017.
India
The Indian economy increased by 7.2% year on year in Q4 2017, significantly up from 6.5% in Q3 2017.
Capital investment increased by 12% in Q4 2018, and Government spending by 6%, representing an
increase of 2.3% from the previous quarter. Manufacturing output increased by 8% year on year in Q4
2018, up from 6.9% in Q3 2017, while construction activity also increased. However, consumer spending
slowed in Q4 2018 to a rate of 5.6% from 6.6% in Q3 2018. For the fiscal year ended March 2018, the
Indian Government expects the economy to have increased by 6.6%, down from 7.1% in the previous
fiscal year.
Passenger car sales in India increased by 7% year on year in March to 285,477 vehicles. Cumulatively
passenger car sales increased by 7% or by 58,000 vehicles to 861,000 vehicles in the first three months
of 2018 versus 2017.
Passenger car sales in India increased by 8% or by 252,000 vehicles to 3.17m vehicles in 2017 versus
2016, exceeding 3m vehicles for the first time. Demand for passenger cars sales in India was particularly
strong ahead of the introduction of the General Sales Tax, (GST) which caused consumer uncertainty
due to concerns that car selling prices would increase. A good monsoon season in India also supported
stronger demand for new vehicles in rural areas. While India’s large 20 cities account for 50% of
passenger car sales in India, demand in smaller cities and towns is starting to increase more rapidly. Year
end price discounts also contributed to a strong end to new car demand in December 2017.
Demand for small passenger cars was driven by Government policy, which reduced taxes on new
vehicles with a length of less than 4 metres, and lower emission levels. Sales of sport utility vehicles
increased by 20% to 870,000 vehicles in 2017, most of which are less than 4 metres in length.
India’s largest car producer Maruti Suzuki reported a 15% increase in passenger car sales in India in
2017, an increase of 207,000 vehicles to a record 1.6m vehicles, accounting for over 80% of the increase
in passenger car sales in India in 2017. India’s second largest car maker Hyundai reported a 5% increase
in passenger car sales in India in 2017 to 527,000 vehicles.
Vehicle makers believe the impact of demonetisation at the start of 2017 and the uncertainty caused by
the introduction of the General Sales Tax dampened demand for new passenger cars in India in 2017.

Forecasts suggest demand for passenger cars in India will increase by a further 7% in 2018 as
consumers benefit from tax reforms and an improving economy.
Sales of two wheelers increased by 14% in the fiscal year ending March 2018 to 20m units, with sales of
scooters increasing by 19% to 6.7m vehicles and motorcycle sales increasing by 13% to 12.6m vehicles.
Strong demand for two wheelers has been supported by two years of good monsoons in India.
Commercial vehicle sales increased year on year by 24% to 108,600 vehicles in March. Cumulatively
commercial vehicle sales increased by 23% in the fiscal year ending March 2018 to 399,000 vehicles
from 325,000 vehicles in the previous year. Sales of medium and heavy trucks increased with a weight of
greater than 16 tonnes increased by 18% to 294,000 trucks in the eleven months to February 2018.
Medium and heavy truck demand is forecast to increase by between 9-11% in the fiscal year to March
2019 and by 8% in the following fiscal year. Freight rates in India are also increasing at a faster rate than
the price of diesel, supporting improvements in profitability for trucking companies. Sales of construction
equipment are forecast to exceed 50,000 vehicles in the current fiscal year, driven by road construction
and other infrastructure development. The implementation of the General Sales Tax has made long haul
multi axle vehicles more economical as goods are being transported from plants directly to markets.
Ashok Leyland is forecasting a 10-12% increase in demand for trucks in India driven by public
investments in infrastructure projects, and increased transport business as companies benefit from the
‘hub and spoke’ model to transport goods.
Sales of light commercial vehicles increased year on year by 24% to 453,000 trucks in the eleven months
to February 2018, with sales forecast to increase by a further 10-12% in the current fiscal year ending
March 2019.
Tata Motors reported a 37% increase in commercial vehicle sales to 49,100 trucks in March, with sales of
tipper trucks increasing by 58% year on year driven by strong sand and coal demand.
Ashok Leyland reported a 20% increase in vehicle sales to 22,450 trucks in March, with sales of medium
and heavy trucks increasing by 12% to 17,000 trucks and light truck sales increasing by 58% year on
year to 5,400 trucks. For the fiscal year ending March 2018 Ashok Leyland reported a 21% increase in
truck sales to 174,000 trucks.
Ashok Leyland is investing Rs400crore (US$60m) over the next two years to develop new light trucks to
meet the BS-VI emission standards, which should come into production in 2020. Ashok Leyland is aiming
to double its share of the light commercial vehicle market in India to 30% from 16% at present. The
company is forecasting the market for light trucks will reach 600,000 vehicles per annum by 2020, as light
trucks are increasingly being used for the last mile or two under the hub and spoke system.
Ashok Leyland is also investing in a new bus assembly plant at Mallavalli in Andhra Pradesh with an
annual production capacity of 9,600 buses.
Tata Motors reported a 37% increase in commercial vehicle sales to 49,200 trucks in the fiscal year
ended March, due to infrastructure spending, restrictions on loading trucks; road construction and
increased mining activity.
Mahindra and Mahindra reported an 11% increase in commercial vehicles sales in March 2018 to 25,500
vehicles. For the fiscal year ended March 2018. Mahindra and Mahindra reported a 20% increase in
commercial vehicle sales driven by a 40% increase in medium and heavy truck sales to 9,500 trucks,
while light commercial vehicle sales increased by 20% year on year.
VE Commercial Vehicles recorded its highest ever monthly sales of 9,411 trucks in March, an increase of
28% year on year, with sales reaching 56,900 trucks in the last fiscal year. The company sells Eicher and
Volvo branded trucks.
Sonalika Tractors reported an 80% increase in tractor sales in March to 12,800 tractors and a 22%
increase in the last fiscal year to 100,000 tractors. Favourable monsoons, combined with pro agricultural
budget allocations from the Indian Government is expected to lead to steady growth in the agricultural
vehicle market in the new fiscal year.
Vehicle production in India increased by 10% or by 124,000 vehicles to 1.36m vehicles in the first three
months of 2018 versus 2017, as detailed in the table overleaf.

Vehicle Production (India) 2017 vs 2018 – Three Months only - 000’s

Passenger Car 1,012 1,072 5.9
Commercial Vehicle 227 291 24
Total 1,239 1,363 10
Passenger car production increased by 60,000 vehicles to 1.07m vehicles in the first three months of
2018 versus 2017, as detailed in the table below.
Passenger Car Production from the Five Largest Vehicle Makers (India)
2017 vs 2018 – Three Months only - 000’s

Maruti Suzuki 443 487 10
Hyundai 160 175 9
Mahindra & Mahindra 68 78 15
Ford 68 73 7
Tata Motors 49 60 22
Others 221 196 -12
Total 1,012 1,072 3.4
Maruti Suzuki increased its vehicle output by 10% or by 44,000 vehicles to 487,000 vehicles in the first
three months of 2018 versus 2017, accounting for most of the increase in passenger car production in Q1
2018. India’s second largest car producer, Hyundai increased its output by 14,400 vehicles to 175,000
vehicles year on year in Q1 2018. Ford and Mahindra and Mahindra both increased passenger car output
by 10,000 vehicles year on year in Q1 2017. By contrast passenger car output by the smaller car makers
in India declined by almost 25,000 vehicles in Q1 2018, suggesting the automotive industry in India is
consolidating around the five largest car makers.
Maruti Suzuki has a target to produce 2m passenger cars per annum by 2020 from a current production
capacity of 1.7m vehicles per annum in 2017, and is aiming to produce 15 new models in the five years to
2020. The company will install an additional assembly line at its Gujarat plant and could add a third
assembly plant at its Hansalpur plant, which would give the plant a production capacity of 750,000
vehicles per annum.
Passenger car exports from India declined by 1.5% to 747,000 vehicles in the fiscal year 2017/18.
Commercial vehicle production in India increased by 28% or by 64,000 vehicles to 291,000 vehicles year
on year in Q1 2018, as detailed in the table below.
Commercial Vehicle Production for the Five Largest Truck Makers (India)
2017 vs 2018 – Three Months only - 000’s

Tata Motors 94 127 35
Mahindra & Mahindra 57 71 24
Ashok Leyland 48 53 10
VECV 16 22 35
Force Motors 5 7 20
Others 5 10 86
Total 227 291 28
Most of the increase in commercial vehicle output in India was accounted for by an increase in output by
Tata Motors of 35% or 33,000 vehicles to 127,000 vehicles in Q1 2018 versus Q1 2017. Mahindra and
Mahindra increased its output by 25% or by 14,000 vehicles to 71,000 vehicles in Q1 2018.
Vehicle production in India increased by 6% or by 197,000 vehicles to 3.15m vehicles in 2017 versus

Vehicle production increased by 6% or by 304,000, vehicles driven by an increase in passenger car

output of 275,000 vehicles to 3.95m vehicles in 2017 versus 2016, as detailed in the table below.
Vehicle Production (India) 2016 vs 2017 – 000’s

Passenger Car 3,677 3,952 7
Light Truck 465 504 8
Heavy Truck 293 283 -3
Total 4,435 4,739 6
Light commercial vehicle output increased by 8% in India or by 39,000 vehicles in 2017 and is projected
to continue to increase at a similar rate in 2018. A recovery in medium and have truck demand and output
in India in 2H 2017 was insufficient to offset weak demand in 1H 2017, leading to a 3% decline in output
in 2017.
Passenger car sales in India are forecast to increase by around 7% in the current fiscal year and
commercial vehicle sales by around 10% on average. Increased domestic demand for new vehicles in
India should drive an increase in vehicle output of 150-200,000 vehicles in the fiscal year ended March
2019.
Unit passenger car and truck tyre production in India is assessed to have increased by up to 8% or by
5m tyres to an estimated 73.6m tyres in 2017 versus 2016 as detailed in the table below.
Unit Tyre Production (India) Fiscal Year 2015/16-2017/18** - 000’s
Tyre 2015/16 2016/17* 2017/18** 2017/18

% Change
Passenger Car 38,700 41,800 45,200 7
Light Truck 9,700 9,900 10,900 10
Heavy Truck 16,700 16,400 17,500 6
Total 65,100 68,100 73,600 8
*Estimated based upon nine months data (Apr-Dec)
Most if not all of the increase in output was in 2H 2017, as the Indian tyre market and truck output picked
up strongly in the second half of the year after the imposition of the general sales tax. In addition imports
of radial truck tyres from China declined significantly following the imposition of anti dumping duties in
India, which contributed to a significant upturn in domestic radial truck tyre output.
Unit passenger car tyre output in India is assessed to have increased by around 7% or by 3m tyres to an
estimated 45.2m tyres in 2017 versus 2016, as detailed in the table below.
Estimated Unit Passenger Car Tyre Production and Demand (India) 2016/17 vs 2017/18 - 000’s
Passenger Car Tyre 2016/17 2017/18 % Change

2017/18
Production 42,000 45,200 7
Imports 5,600 5,600 -
Exports 1,800 2,200 22
Passenger car tyre demand in India is reported to have increased driven by an increase in passenger car
output of 275,000 vehicles in 2017 versus 2016. Demand in the replacement car tyre market in India is
assessed to have increased by around 5% or by an estimated 1.4m tyres to 28.8m tyres in 2017. The
increase in demand for passenger car tyres in India is assessed to have been met by an increase in
domestic car tyre output, while passenger car tyre imports to India were unchanged from the previous
fiscal year in 2017/18 at 5.6m tyres, with almost half of the car tyre imports coming from China.

Passenger car tyre exports from India increased by 360,000 tyres to almost 2.2m tyres in 2017, driven by
an increase in exports to the UAE of 110,000 tyres and Brazil of 90,000 tyres offset by a reduction in
shipments to the Netherlands of 130,000 tyres and to Nepal of 170,000 tyres in 2017. Apollo Tyres
reports that it has substantially reduced passenger car tyre exports from its Indian tyre plants to Europe
due to strong domestic demand and has been operating its passenger car tyre production capacity at full
operating rates.
The Taiwanese tyre producer Chen Shin is to start tyre production at its new tyre plant in Gujarat
Province this year at a cost of US$400m. The plant has an initial production capacity of 20,000
motorcycle tyres per day.
Unit medium and heavy truck output is assessed to have increased by 3% or by 500,000 tyres to an
estimated 16.9m tyres in 2017 versus 2016, as detailed in the table below.
Estimated Unit Medium and Heavy Truck Tyre Production and Demand (India)
2016/17 vs 2017/18 – 000’s
Truck Tyre 2016/17 2017/18 % Change

2017/18
Production 16,400 16,900 3
Imports 1,700 1,100 -35
Exports 3,300 3,400 3
It is estimated that demand for truck tyres in the India replacement tyre market increased by around 5% in
2017. There was a strong upturn in demand for truck tyres in India in Q3 and Q4 2017, following a
contraction in demand in Q2 ahead of the introduction of the General Sales Tax. Demand for radial truck
tyres is reported to have increased by 9% in Q4 2017 versus Q3 2017, following a 21% increase in Q3
2017, with radial truck tyres accounting for 47% of the truck tyre market in India. The sharp increase in
demand for domestically produced radial truck and bus tyres in 2H 2017 follows the imposition of anti
dumping duties upon Chinese produced radial truck tyres.
Apollo Tyres reports truck tyre demand increased at a double digit rate in Q4 2017, driven by investment
in infrastructure, and increasing industrial activity which is positively impacting freight volumes. In addition
the imposition of anti dumping duties on Chinese produced radial truck tyres has led to a substantial
reduction in truck tyre imports. Imports of radial truck tyres has declined to around 50,000 tyres per month
from 150,000 tyres per month, and are expected to remain around at the 50,000 tyres per month level. JK
Industries reports radial; truck tyre imports from China declined from an average 107,000 tyres per month
in fiscal year 2017, to an average of 63,000 tyres per month in the current fiscal year. On this basis it is
estimated demand for domestically produced truck radial tyres increased by around 1-1.2m tyres on an
annualised basis in 2H 2017.
Tighter restrictions on truck overloading is also driving increased demand for tyres in the OE sector as the
payload on new trucks is higher the number of tyres increases. Reports suggest radial truck tyre
production capacity across the tyre industry in India is probably at or close to full operating rates.
Apollo Tyres has started the construction of its fifth tyre plant in India at Chinnapanduru in Andhra
Pradesh state at a cost of Rs18bn (US$268m), and is due on stream in mid 2020. The plant is to produce
passenger car tyres initially and then other types of tyre later.
Michelin is to more than double production capacity at its plant in Chennai to 30,000mt by the end of
2018. The plant currently produces 70% of the truck tyres Michelin sells in India, and the company is
seeking to produce all of its truck tyre requirements for the Indian market at its Chennai plant. Michelin
has also secured a contract to supply tyres for the Indian truck maker Ashok Leyland for its 37 tonne truck
range. The company believes truck tyre buyers are undergoing a change in mindset in India as they start
to appreciate the cost benefits of investing in premium tyres such as those produced by Michelin.
In 2H 2017 Maxxis Group opened its new tyre plant in Ahmedabad in Gujurat State at a cost of around
US$400mt. The new plant produces tyres for two wheel vehicles, with a daily capacity of 20,000 tyres and
40,000 tubes.

The Japanese tyre maker Yokohama is to increase production capacity for off road tyres at the Alliance
Tyre Group it acquired in 2016. The company will start construction of the new plant at the Dahej plant in
Q1 2018 at a cost of US$45m, and result in tyre production capacity being increased from 57,000mt at
present to 91,700mt by the end of 2019.
Ceat has acquired 163 acres of land in Chennai to construct a new tyre plant close to many vehicle
makers such as Hyundai, Renault, Ford and Kia. The company is to invest Rs50bn in the new plant over
the next five years.
Yokohama Tyre is to increase passenger car tyre production capacity at its plant in India to 1.53m tyres
per annum from current capacity of 700,000 tyres per annum at a cost of Rs3.8bn. Construction of the
new capacity is due to start in March 2018, with production due to start in Q4 2019.
Bridgestone is investing US$304m to increase production capacity at its plants in Pune and Indore over
the next five years. In total daily production capacity is to be increased by 60% by 2022 to around 41,000
tyres per day.
India’ largest tyre producer MRF reported a 22% decline in net profits to Rs300 crore for Q3 2017, due to
a 15% increase in raw material costs. Sales revenues declined by 2% to Rs3,660crore in Q2 2017. MRF
is investing US$70m over ten years for a new tyre plant in Gujarat to produce the company’s full range of
tyres.
Continental AG reported unit passenger car tyre production at its plant in Modi, India was unchanged at
300,000 tyres in 2017 versus 2016, while truck tyre output increased by 100,000 tyres to 500,000 tyres in
2017. The company is forecasting Asia will account for 60% of the growth in demand for passenger car
tyres globally in 2018. Continental is forecasting it will increase passenger car tyre production capacity at
its plant in India by 1.3m tyres per annum and its truck tyre capacity by 700,000 tyres per annum by
2020/21. The company reports labour costs at its plant in India are the lowest worldwide for the company
at 8% of those in Germany.
Apollo Tyres reported sales revenues of Rs40.1bn (US$498m) in Q4 2017, an increase of 16.9% year on
year led by increasing sales of radial truck tyres. However, net profits declined by 17% year on year to
Rs2.45bn (US$36m) due to higher raw material costs. Sales revenues for the company’s Indian
operations increased by 21% year on year. The company reports it benefited significantly from the
reduction in truck and bus radial imports into India following the imposition of anti dumping duties on
Chinese produced truck tyres. This resulted in a 16% increase in sales of radial truck and bus tyres year
on year in Q4 2017, and 12% from the previous quarter.
Apollo Tyres reports demand for its truck tyres increased overall by 22%, with growth for truck and bus
radial tyres increasing by around 50% year on year, while demand for passenger car tyres was flat versus
the previous year. The company reports that it is currently experiencing strong demand for its premium
truck tyres. Apollo Tyres also reports sales of its tyres for two and three wheelers increased by 90% year
on year, while light commercial vehicle tyre sales increased by 10%. Apollo Tyres reports it was operating
its radial truck and bus tyre production capacity at full production rates of 9,000 tyres per day in Q4 2017.
Truck tyre production capacity will increase to 11,500 tyres/day by the end of 2018.
In the passenger car tyre sector Apollo tyres reports it has been operating its Indian plants at full
operating rates, as domestic sales have increased at a mid single digit rate. The company is currently
debottlenecking its passenger car tyre production capacity, which will be completed by the end of the
current fiscal year.
JK Industries reported sales revenues of Rs21.2bn (US$317m) in Q4 2017 up % from Rs 19.8bn in Q4

2016 (US$296m). Profits declined sharply to Rs2.3bn (US$3.4m) in Q4 2017 from Rs1.28bn (US$19m) in
Q4 2016 due to higher raw material costs. In India the company reported a 9% increase in sales
revenues to Rs 2.07bn (US$309m) in Q4 2017 from Rs1,902.79 (US$283m) in Q4 2016.
JK Industries is forecasting it will sell a total of 20m tyres in the fiscal year ended March 2018, up 15%
from total unit tyre sales of 17.4m tyres in the previous fiscal year.
JK Industries sold 1.41m bias truck tyres in nine months to December 2017, compared to sales of 2.24m
tyres in the fiscal year ending March 2017. The company sold 1.88m radial truck tyres in the nine months
to December 2017 compared to sales of 2.21m tyres in the year ended March 2017. JK Industries also
sold 6.15m passenger car tyres in the nine months to December compared to sales of 8.3m tyres in the
fiscal year ended March 2017.

JK Industries is currently investing Rs2.75bn (US$41m) to increase production capacity for radial truck
and bus tyres from 740,000 tyres per annum to 1,385,000 tyres.
JK Industries reports it has a 32% share of the domestic truck and bus radial tyre market in India,
followed by Apollo Tyres with 26% and MRF with 14%. The company also reports it has a 32% share of
the light commercial vehicle tyre market in India, followed by Apollo Tyre and MRF which both have a
27% market share.
Bridgestone is to invest US$304m to increase tyre production capacity at its plants at Pune and Indore in
India over the next five years. The two projects will increase tyre production capacity by around 60% to
41,000 tyres/day by 2022. The new production capacity will also allow the company to provide a more
optimal mix of passenger car tyres for the domestic market. Bridgestone’s two plants in India both
produce passenger car, light truck and medium truck tyres, with the plant in Indore being the larger of the
two.
Balkrishna Industries (BKT) has entered into a joint venture with the US biotechnology company Kultevat
Inc to develop new compounding methods using TKS/Russian dandelion rubber, ultimately to be used in
tyre production. Several sample compounds are to be delivered to Balkrishna Industries this year, and in
stage two in 2019 one tonne of stabilised TKS rubber is to be delivered to BKT by October 2019. BKT will
then seek to understand the raw materials physical and chemical behaviour it will seek to develop a range
of formulations for a range of tyres with different formulations.
Market demand for carbon black in India is assessed to have increased by around 3% in the fiscal year
ending March 2018, with most of the growth in the second half of the year, as detailed in the table below.
Estimated Market Demand for Carbon Black (India) 2016 vs 2017 – mt

Production 768,000 779,000 1
Imports 120,000 148,000 23
Exports 118,000 132,000 12
Vehicle production in India increased by 6.8% or by 300,000 vehicles to 4.7m vehicles in 2017, driven by
an increase in passenger car output equivalent to an increase of 275,000 vehicles. Unit passenger car
tyre output is also assessed to have increased in 2017, driven in part by an increase in demand from the
OE sector estimated to have been around 1.3m tyres in 2017. Demand for passenger car tyres in the
replacement market is also assessed to have increased by up to 1.4m tyres assuming a 5% increase in
demand, particularly in 2H 2017. Unit truck tyre output in India is assessed to have increased significantly
in 2H 2017, as the imposition of import duties upon Chinese radial truck tyres in India led to a substantial
decline in the volume of imported tyres of up to 100,000 tyres per month from September 2017 of
between US$245/mt to US$452/mt of tyres. Demand for trucks and truck tyres in India also started to
increase in Q3 2017 following the imposition of the General Sales Tax.
Current reports suggest market demand is exceptionally strong with tyre makers operating at or close to
full operating rates for tuck tyres and passenger car tyres in some instances. This has created very tight
supply conditions for carbon black in India, with well-publicised shortages of carbon black amongst small
and medium sized customers outside of the tyre industry.
Carbon black output is assessed to have increased by around 10,000mt to an estimated 780,000mt in
2018, driven by an increase in domestic demand for carbon black and an increase in carbon black export
sales volumes of 14,000mt to 132,000mt in 2017. As a result the carbon black industry is reported to be
operating at very high rates. In addition the temporary closure of the Continental Carbon carbon black
plant in India due at the order of the UP Control Board, has reduced available production capacity in India
by an estimated 5,000mt to 6,000/mt per month exacerbating an already tight supply situation with reports
suggesting product is being rationed and smaller customers unable to obtain supply from Indian carbon
black producers in some instances.
The shift in carbon black demand in India towards 200 series rubber grades of carbon black is also
having a negative impact upon carbon black output in India as throughput volumes for these grades are
significantly lower than 300 series product.

Phillips Carbon Black reports production capacity in India amongst the five carbon black producers is as
Carbon Black production Capacity (India) 2017 - mt
Carbon Black Producer 2017 mt % of Total

Phillips Carbon Black 515,000 48
SKI India 315,000 30
Himadri 120,000 11
Continental Carbon 85,000 8
Total 1,035,000 100
Phillips Carbon Black reports capacity utilisation in the Indian carbon black industry increased from 44%
in fiscal year 2015 to 94% in fiscal year 2017. Phillips Carbon Black reports its production output
increased from 289,000mt in the fiscal year 2014 to 383,000mt in the fiscal year 2017. The company is
increasing production capacity in the current fiscal year by 30,000mt through debottlenecking in the
current fiscal year with a further 80,000mt of brownfield expansion in the fiscal year 2019. The company
is also to invest in a Greenfield expansion of 120,000mt per annum in the longer term.
Non rubber carbon black applications currently account for 9% of Phillips Carbon Black’s sales volumes,
and 12% of sales revenues. The company is to focus upon increasing penetration of the non rubber
market sector, and is increasing its range of specialty carbon blacks with the aim of being able to supply
90% of plastic applications for carbon black which represents the largest market sector.
Phillips Carbon Black reported a 30% increase in sales revenues in the first nine months of the fiscal year
ending March 2018 to Rs18bn (US$269m), with raw material costs increasing 30% to Rs11.59bn
(US$172m) or 64% of sales revenues. Profits after tax increased to Rs1.55bn (US$23m) in the first nine
months of the current fiscal year to March 2018 from Rs37bn (US$5.5m) in the same period in the
previous year.
The tyre company Balkrishna (BKT) is to construct a carbon black plant in India with an annual production
capacity of 60,000mt per annum at its plant at Bhuji, Gujarat. The company is investing US$32m in the
project but has not announced when the plant will be completed. The company has allocate an initial
payment of Rs1.5bn (US$22m) for the project, and reports the new plant will enable it to better ensure
product quality to the increasingly accurate controls at the start of the production process. BKT has the
production capacity to produce 140,000mt per annum of tyres. Balkrishna Industries Limited the producer
of off road tyres has committed to constructing a carbon black plant at its site in Bhuj, but it is unclear
whether the company has started construction of the new plant.
Himadri Chemicals is to invest RS10bn (US$149m) to increase production capacity at its carbon black
plant at Mahistikry in West Bengal. Production capacity is to be increased by 60,000mt per annum by
April 2019 in the first phase. Some of the new production capacity will be for specialty grades of carbon
black. Himadria Chemicals is to add 40 new grades of carbon black which will generate Rs25bn
(US$373m) of additional sales revenues from revenues of Rs14.7bn (US$219m) in fiscal year 2017. The
company assesses domestic demand for specialty carbon black grades in India is around 80,000mt of
which 50% is currently imported. The company estimates it will be able to meet 70% of domestic demand
for specialty grades of carbon black. Himadri Chemicals reports demand for specialty carbon black in
India is increasing at an annual rate of around 6%.
The volume of carbon black imports to India increased by 22% or by 27,000mt to 148,000mt in 2017
versus 2016, as detailed in the table overleaf.

Carbon Black Imports (India) 2016 vs 2017 – mt

US$/mt 2017
China 54,582 55,154 907
South Korea 25,900 32,916 1,000
Russia 11,528 21,441 852
Egypt 2,715 7,039 919
United States 5,670 6,452 3,274
Italy 1,992 2,886 1,439
Iran 2,151 2,776 889
Germany 2,347 2,760 3,493
Japan 2,355 2,736 2,103
Indonesia 4,260 2,270 992
South Africa 12 1,698 1,044
Netherlands 805 1,668 1,619
Thailand 985 1,614 1,133
Saudi Arabia 383 1,479 659
UAE 485 1,010 894
Canada 1,085 999 1,629
United Kingdom 880 765 889
Singapore 417 606 2,004
Mexico 61 597 875
Unidentified Country 339 289 1,102
France 191 268 1,369
Czech Republic 320 183 992
Colombia 68 177 914
Other 1,237 473
Total 120,768 148,256 1,128
Carbon black imports to India from Russia increased by 9,900mt to 21,000mt 2017, despite an anti
dumping tariffs on imported upon Russian produced carbon black in India of Carbon black imports from
South Korea increased by 7,000mt and from Egypt by 4,300 to 7,000mt in 2017 versus 2016.
Traced carbon black imports from China to India for Q1 2018 indicate a sharp increase in volumes to
32,440mt from 9,100mt in Q1 2017, as Chinese carbon black producers seek to alleviate the tight supply
position in the Indian market. The average export price of carbon black imported from China was
US$1,270/mt in Q1 2018 without taking into account import tariffs on Chinese produced carbon black in
India.
Carbon black exports from India increased by 14,000mt to 132,000mt in 2017 versus 2016, as detailed in
the table overleaf.
Carbon black exports from India to Asia increased by 15,200mt in 2017, driven by an increase in exports
to Sri Lanka of 5,700mt; to Vietnam of 2,800mt and to South Korea of 2,000mt. Exports to Bangladesh
declined by 1,000mt to 5,700mt in 2017.
Carbon black exports to Europe increased by 3,200mt to almost 11,000mt in 2017, driven by an
exceptional increase in exports to Portugal of 6,800mt, offset by a reduction in exports to the Netherlands
of 1,200mt; to Italy of 900mt and to Greece of 860mt in 2017 versus 2016. The closure of the Orion
Carbons carbon black plant in south west France at the end of 2016, could have prompted the large
increase in carbon black exports to Portugal in 2017, as the French plant was an important source of
carbon black for the Portuguese market prior to its closure.
Carbon black exports from India to the Middle East and Africa declined by 4,000mt to 14,500mt in 2017,
driven by a decline in exports to Turkey of 6,000mt, partially offset by an increase in exports to Saudi
Arabia of 1,200mt in 2017.

Carbon Black Exports (India) 2016 vs 2017- mt
Destination 2016 2017 Average Import Price

US$/mt 2017
Sri Lanka 21,225 26,999 903
Vietnam 17,749 20,553 844
South Korea 12,835 14,924 741
Japan 9,522 10,545 861
Indonesia 8,281 9,885 859
Bangladesh 6,812 5,785 882
Thailand 3,801 5,211 998
Malaysia 1,854 2,838 880
Australia 1,312 1,475 964
Taiwan 1,508 1,385 858
Philippines 741 722 832
Nepal 3,515 3,772 135
Singapore 162 413 795
China 270 296 1,598
Asia Total 89,587 104,803
Portugal 2 6,799 738
Netherlands 2,425 1,232 1,300
United Kingdom 1,302 998 1,048
Belgium 879 595 1,064
Italy 1,468 575 743
Romania 132 220 828
Germany 262 220 1,198
Greece 1,044 185 845
Croatia 242 154 815
Europe Total 7,756 10,978
United Arab Emirates 5,272 6,081 886
Turkey 9,987 3,920 824
Saudi Arabia 1,825 3,024 983
Israel 1,130 708 933
Iran 297 491 1,902
Qatar 20 155 1,188
South Africa 35 149 861
Middle East & Africa Total 18,566 14,528
United States 1,607 1,581 1,740
Canada 737 648 1,448
Americas Total 2,344 2,229
Grand Total 118,253 132,538 864
The table below details traced US carbon black feedstock imports to India for the first two months of
2018.
Carbon Black Feedstock Exports from US to India - 2018 – Three months only - FAS
Month Mt Price US$/pb RsUS$ Exchange Monthly

Rate* Feedstock Price
Rs/Mt
January 76,300 59.40 63.50 20,745
February 41,400 60.00 64.32 21,225
March 163,600 60.33 64.96 21,554
Contract prices for carbon black in India are currently assessed to be priced around US$1,250/mt for
tread grade N220 and around US$1,080/mt for grade N330 excluding local taxes. Spot prices in the
mechanical rubber goods market are reported to be around US$1,400/mt for carcass grades.

Philippines
The Philippines economy increased by 6.7% year on year in 2017, driven by increased agricultural output
and increasing export sales. Government spending also increased by an exceptional 14% in Q4 2017
presenting the key driver of the economy at the end of the year. Manufacturing output increased by 7.3%
year on year in Q4 2017.
Passenger car sales in the Philippines declined by 7% to 10,900 vehicles in March, and cumulatively by
9% or by 3,000 vehicles to 28,900 vehicles in the first three months of 2018 versus 2017. The decline in
vehicle sales follows very strong passenger car sales in 2017 when sales volumes increased by 4.7% or
by 6,000 vehicles to 139,000 vehicles in 2017. Vehicle sales were pulled forward into 2017 ahead of an
increase in vehicle sales taxes at the start of 2018. Adjustments to the tax structure in the Philippines,
which has resulted in higher vehicle sales tax also being blamed for the reduction in vehicles sales this
year. The automotive industry association is forecasting flat or lower vehicle sales in the Philippines in
2018, following record sales volumes in 2017.
The largest vehicle maker in the Philippines, Toyota reported a 15% decline in vehicle sales year on year
in March, while Mitsubishi reported an 18% increase in vehicle sales year on year.
Commercial vehicle sales declined year on year by 30% in March and by 8% to 57,000 vehicles in Q1
2018. However, commercial vehicle sales increased by an exceptional 26% or by 60,000 vehicles to
286,000 vehicles in 2017 versus 2016, driving total vehicle sales in the Philippines to a record 425,000
vehicles in 2017.
Isuzu was the largest seller of light and heavy trucks in the Philippines in 2017 selling 7,500 trucks,
followed by Hino which reported a 40% increase in truck sales in 2017 to 4,000 trucks.
Vehicle production data for the Philippines is not yet available for 2017. However, record vehicle sales
volumes of 425,000 vehicles suggest an increase in domestic vehicle output in 2017. Vehicle imports to
the Philippines increased by 14% or by from 93,000 vehicles in 2016 to 106,000 vehicles in 2017. This
would imply locally assembled vehicles in the Philippines increased by around 53,000 vehicles to 320,000
vehicles in 2017 from around 266,000 vehicles in 2016.
The Philippines Government is aiming to drive an increase in domestic vehicle output to 500,000 vehicles
per annum in the longer term. A current forecast is suggesting vehicle output will reach around 350,000
vehicles per annum by 2021. Most of the increase in output in the Philippines is expected to be driven by
increased domestic demand, rather than for export.
Toyota, which is the largest vehicle assembler in the Philippines, reported a 15% increase in vehicle sales
in the Philippines to 182,000 vehicles in 2017. Toyota is investing P405.8m (US$80m) to increase
production capacity at its plant in the Philippines over a two year period. Toyota applied for funding under
the CARS scheme and is starting to produce its Vios model in the Philippines from mid 2018, with the
company investing US$67m to produce 230,000 of the Vios vehicles over the six years from 2018, or
around 33,000 vehicles per annum. In 2017 Toyota produced 62,000 vehicles at its plant in the
Philippines up from 55,700 vehicles in 2016 representing an 11% increase year on year.
The Comprehensive Automotive Resurgence Strategy (CARS) is aiming to make the Philippines a major
automotive market by 2020. The scheme is seeking to drive significant increases in domestic vehicle
output through fiscal and non fiscal incentives in order to encourage the local assembly of automotive
vehicles. Under the terms of the funding vehicle makers such as Toyota are required to produce 200,000
units of one model being funded over a six year period. Government subsidy from the CARS programme
is calculated at around Yen100,000 (US$915) per vehicle. This offsets the weaker economies of vehicle
production in the Philippines where it has previously been more economic to import vehicles.
Mitsubishi Motors reported a 19% increase in vehicle sales to 71,000 vehicles in the Philippines in 2017.
Mitsubishi Motors acquired a vehicle plant formerly owned by Ford in the Laguna Province, Philippines in
2013. The company started vehicle production at the site in January 2015. In 2017 the company started
the production of a new model the Mirage G4, which is the first model to be produced under the
Philippines Government’s CARS programme. Mitsubishi agreed to produce the new model in the
Philippines as part of a P1.85bn (US$360m) trade agreement made between Japan and the Philippines.
The company is committed to producing 200,000 units of the new Mirage and Mirage G-4 model over a
six year period, which are largely being supplied to the domestic Philippines passenger car market.
Mitsubishi is adding an extra shift at its assembly plant to double production capacity to 100,000 vehicles
per annum.

There are currently 15 vehicle makers with vehicle assembly plants in the Philippines, with a total industry
annual production capacity of 250,000 vehicles per annum. The Philippines Government is aiming to
drive an increase in domestic light vehicle demand to 500,000 vehicles per annum in the medium term,
with one forecast suggesting vehicle production will triple to over 300,000 vehicles per annum by 2021.
Tyre output in the Philippines, at the single tyre producer Yokohama, is assessed to have declined in
2017 versus 2016, based upon a decline in the volume of traced passenger car tyres imported into major
markets from the Philippines in 2017.
The Yokohama Rubber tyre plant is the single tyre plant in the Philippines and is the company’s largest
tyre plant outside of Japan. In 2016 the company completed an expansion in tyre production capacity at
the plant taking annual production capacity for passenger car and light truck tyres from 11.9m tyres in
2016 to 12.5m passenger car and light truck tyres from the start of 2017. The new capacity is also to
produce passenger car tyres with a diameter of up to 20” in diameter. The expansion forms part of
Yokohama Rubber’s global objective of increasing its supply of tyres to the OE market fourfold between
2014 and 2020.
The Philippines plant is an important production base for export of Yokohama tyres to North America,
Europe and the rest of the Asean region. Output was disrupted temporarily in May 2017 due to a fire in
part of the plant and in the plants warehouses.
Passenger car tyre exports from the Philippines were 55,000mt in 2017, as measured in metric tonnes,
with no comparable data for previous years. Passenger car tyre exports to the US were 34,600mt
accounting for 63% of exports, and to Japan of 3,300mt in 2017. Traced passenger car tyre imports from
the Philippines to a number of the largest tyre markets suggest a decline in the volume of car tyre exports
from the Philippines in 2017 versus 2016, as detailed in the table below.
Traced Unit Passenger Car Tyre Imports from the Philippine - 2016 vs 2017 – 000’s
Source 2016 2017 % Change 2017

US 3,300 3,000 -10
EU* 1,900 1,450 -23
Canada 670 600 -10
Japan 680 430 -37
Russia 330 170 -49
Malaysia 130 110 -10
Mexico 85 100 12
Argentina 40 90 ++
S Korea 10 40 ++
Brazil 55 20 -62
India 16 12 -25
Colombia 5 10 ++
Total 7,200 6,000 -16
* EU Estimated based upon average tyre weight of 8.5kg
Traced passenger car tyre imports to the European Union from the Philippines declined from 16,000mt of
tyres in 2016 to 12,300mt of tyres in 2017. Traced imports from the Philippines to the US also suggest a
decline in passenger car tyre exports from the Philippines of 300,000 tyres to 3m tyres in 2017 versus
2016 and 2015, as detailed in the table below.
Traced Passenger Car Tyre Imports to the US from the Philippines 2015 vs 2016 vs 2017 – 000’s
Passenger Car 2015 2016 2017 % Change

Tyre Diameter 2017
13” or less 0 0 0 -
>13”<14” 0 0 0 -
>14”<15” 70 170 170 -
>15”<16” 330 630 500 -22
>16”<17” 1,100 1,500 1,100 -27
>17”<18” 510 520 680 30
>18” 300 500 540 8
Other 0 30 10 -
Total 2,300 3,350 3,000 -10

Yokohama Rubber has been adding production capacity for larger diameter passenger car and light truck
tyres in the past four years in the diameter tyre size range from 18 inches to 20 inches.
In March 2017 an agreement was made by the Philippines Department of Agriculture, the Philippine
Rubber Farmers Association and Phoenix Petroleum to make a feasibility study for the construction of a
tyre plant with an annual production capacity of 4m passenger car tyres, light truck tyres and tyres for
agricultural vehicles. As yet it is not clear whether the study has confirmed the viability of a plant whose
aim in part would be to provide a market for locally produced rubber in the Philippines.
Market demand for carbon black in the Philippines declined by 4,000mt to 31,000mt in 2017, based
upon carbon black imports into the country in 2017 versus 2016, as detailed in the table below.
Estimated Market Demand for Carbon Black (Philippines) 2016 vs 2017 - mt

Production 0 0
Imports 35,000 31,000 -11
Exports 0 0 -
The decline in market demand for carbon black could reflect lower unit passenger car tyre output at the
single tyre maker Yokohama Rubber, despite the company increasing production capacity at the plant in
the past two years. Traced imports of passenger car tyres from the Philippines to major tyre markets in
2017 versus 2016, suggest a decline in tyre exports from the Philippines of around 1m tyres.
The development of the Philippine Government’s Comprehensive Automotive Resurgence Strategy

(CARS) commits vehicle makers to produce 200,000 vehicles over a six year period in return for
Government assistance, but also requires additional parts localisation. This could drive some increases in
demand for carbon black from the automotive supply industry in the Philippines in the medium term.
Carbon black imports to the Philippines declined by 4,000mt to 31,000mt in 2017 versus 2016, as
Carbon Black Imports (Philippines) 2016 vs 2017 – mt

US$/mt 2017
Japan 6,782 9,652 670
Thailand 12,386 8,097 916
South Korea 8,616 4,490 791
China 5,409 4,246 788
UAE 528 2,980 737
India 727 599 851
Indonesia 348 358 1,181
Taiwan 235 370 913
Iran 135 0 -
Malaysia 52 241 622
Germany 31 28 3,579
Canada 8 0 -
Other 15 77 -
Total 35,377 31,225 803
Carbon black imports to the Philippines from Thailand declined by 4,300mt in 2017, and from South
Korea by 4,100mt. By contrast imports from Japan increased by 2,800mt and from the UAE by 2,450mt to
almost 3,000mt in 2017 versus 2016. Low average import prices for carbon black in the Philippines
underline the highly competitive nature of the Philippines carbon black market.

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Chemical Market Intelligence

Currency $ Equivalent: € 0.833 £0.734 ¥109.30

Chemical Market Intelligence

© Chemical Market Intelligence 1

US Exports of Carbon Black Feedstock Oil

Destination Jan-March Jan-March Jan-March Jan-March

US Exports of Carbon Black Feedstock Oil

Destination March 2018

© Chemical Market Intelligence 2

Vehicle 2017 2018 % Change 2018

© Chemical Market Intelligence 3

US Tyre Shipments 2017 vs 2018* - 000’s

Tyre 2017 2018* % Change 2018

© Chemical Market Intelligence 4

Tyre Diameter 2017 2018 % Change 2018

Source 2017 2018 % Change 2018

Passenger Car Tyres 2017 2018 % Change 2018

© Chemical Market Intelligence 5

Truck Tyres 2017 2018 % Change 2018

© Chemical Market Intelligence 6

Carbon Black 2017 2018 % Change 2018

© Chemical Market Intelligence 7

Carbon Black Imports (US) 2017 vs 2018 – Three Months only - mt

Source 2017 2018 Average Import Price

© Chemical Market Intelligence 8

Carbon Black Exports (US) 2017 vs 2018 – Three Months only - mt

Destination 2017 2018 Average Export Price

© Chemical Market Intelligence 9

© Chemical Market Intelligence 10

Vehicle Production (Colombia) 2016 vs 2017 – 000’s

Production 2016 2017 % Change 2017

Estimated Market Demand for Carbon Black (Colombia) 2016 vs 2017 – mt

Carbon Black 2016 2017 % Change 2017

Vehicle production in Colombia declined only marginally in 2017 versus 2016.

© Chemical Market Intelligence 11

Carbon Black Exports (Colombia) 2016 vs 2017 – mt

Destination 2016 2017 Average Export Price

Carbon Black Imports (Colombia) 2016 vs 2017 – mt

Source 2016 2017 Average Import Price

© Chemical Market Intelligence 12

Vehicle Production (Italy) 2015 vs 2016 vs 2017 – 000’s

Vehicle 2015 2016 2017 % Change 2017

© Chemical Market Intelligence 13

© Chemical Market Intelligence 14

Passenger Car Tyre 2015 2016 2017 % Change 2017

Passenger Car Tyre 2015 2016 2017 % Change 2017

Truck Tyre 2015 2016 2017 % Change 2017

© Chemical Market Intelligence 15

Truck Tyre 2015 2016 2017 % Change 2017

Carbon Black 2015 2016 2017 % Change 2017

© Chemical Market Intelligence 16

Carbon Black Imports (Italy) 2015 vs 2016 vs 2017 – mt

Source 2015 2016 2017 Average Import

Carbon Black Exports (Italy) 2015 vs 2016 vs 2017 – mt

Destination 2015 2016 2017 Average Import

© Chemical Market Intelligence 17

Vehicle Production (Slovak Republic) – 2016 vs 2017 - mt

Vehicle 2016 2017 % Change 2017