A Complete Guide To Starting A Business In The Growing Carbon Black Industry

how to get started in carbon black industry business opportunities

Carbon black is a derivative generated from the incomplete combustion of petroleum products including tar and ethylene cracking tar. This is basically a form of Paracrystalline carbon which has a high surface area. It has such a high surface area that it exceeds its volume ratio but lower than activated carbon. It has high oxidation and absorbing properties and it is therefore, used in a variety of experiments such as diesel oxidation experiments and a reinforcing filler in tires, and similar substances plastics, paints, inks, and color pigments. Despite having many industrial uses, carbon black is highly toxic and carcinogenic to humans. Even short-term exposure to carbon black dust can result into severe discomfort to respiratory system whereas continuous exposure for long periods of time can result in lung cancer. 

The global carbon black industry is integrated to other end-use industries that usually present high industrial demands. The global industrial demand for carbon black is expected to grow at a 

Compound Annual Growth Rate (CAGR) of 3.5-4 percent by 2022. This reflects a steady growth in the industry in carbon black price trend across the globe. The demand and prices are affected by carbon black specialty regions and specifically by the APAC region. The tire industry is also responsible for the majority of demand i.e. 67 percent and on the other hand, specialty black carbon sector accounts for 9 percent of the global demand. The specialty carbon black sector is also expected to grow at a faster rate in the coming years. 

How To Start A Business In The Carbon Black Market? 

The global carbon black market is a niche market that caters to a majority of industries but involves only a few global-level players. While entering the market with an aim of starting a business, entrepreneurs have to watch out for a majority of factors that can either materialize or spoil their efforts. Here is a look at the factors that should not be overlooked when starting a business in the carbon black market. 

● The current global carbon black production capacity is approximately 15.78 MMT which is expected to grow even further in the next 5 years. Tire industry which accounts for the highest end-use and demand for carbon black is likely to lead the growth. While studying global capacities, APAC accounts for the maximum capacity and it is expected to add approximately 0.91 MMT till 2022. Although the industry is looking for capacity additions in different regions, environmental concerns and low profit margins are also going to be primary reasons for capacity reductions. 

● Talking about the major supply markets across the globe, APAC accounts for the maximum 61 percent of global capacity whereas European Union and North America followed by 13 percent and 11 percent respectively. For supplier/buyer power leverage in the negotiations, buyers usually gain an edge in negotiations. APAC, North America, and European Union possess high buyer power whereas the situation changes drastically for supplier power for these regions. In any case, the engagement levels in the industry are divided between contract and spot engagements. Globally, contract engagements account for 60-70 percent whereas spot engagement is approximately 30- 40 percent. 

For the demand outlook, carbon black use is expected to increase in the upcoming years due to high demands in the tire industry. China dominates the global demand with approximately 41 percent demand share and rising. Such demand is also going to increase due to the emergence of developing economies such as Indonesia, India, and other Asian countries. The same is the case with specialty carbon black materials as its demand are also going to increase till 2022. 

● Entrepreneurs should not forget about the global trade dynamics for an enhanced understanding of the market. Talking about the trade, quality of the specialty grade carbon black material and its price are the major market drivers in the global market. On the other hand, North America has also witnessed marginal fall in imports in recent years. Contrarily, Europe has increased its exports due to surplus availability of carbon black while Asia is considered among net exporters that majorly exports the material to other Asian countries. 

● Entrepreneurs also have to carefully study the industry leaders to learn industry best practices. Some of the industry leaders include Aditya Birla Carbon, Cabot, Orion, CSRC, and Jiangxi Black Cat. Entrepreneurs can learn a new tactics as they can gather the required know-how for starting and establishing a business in the industry by studying such industry giants. This will also give them a fair idea about how industry works and what would be best for their business and niche. 

Entrepreneurs willing to start a business in the carbon black market must lookout for a number of factors before they even enter the market. Such factors include their preferred niche, their expertise, their understanding of market dynamics, and competitive analysis. This can be considered the basic knowledge before starting a business in the global carbon black market.

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