In advance of Carbon Black World, we asked long-time advisor Francois Terrade to share some his thoughts on the importance of feedstocks and raw materials. We were hoping for a few words to place our session in context and Francois delivered.
"It is a pleasure if I can help introduce the matter of feedstocks properly.
Of course most of our attendees will know the basics of carbon black. The briefest refresher - in principle carbon black could be made out of any organic material as it is almost pure carbon. The chemistry has led the industry toward material heavily loaded in carbon with as many aromatic rings as possible. There are three great categories of feedstock: the refinery cat cracker bottom residues, the ethylene cracker residue and the coke oven effluent condensates. The first category led the market for decades and almost set the rules: when oil prices rise, carbon black feedstock costs rise - and vice versa. In fact, many of the carbon black producers have introduced price formulas linked to the major oil Indexes for whatever feedstock they are actually using. Each feedstock market has evolved based on its own core/competitive market.
That said, the development of environmental requirements introduces a bias into the price structure. Low Sulphur feedstock and/or low Nitrogen feedstock demand increases as long as the facilities are not equipped with appropriate de-pollution equipment.
Ultimately, carbon black yield is the primary driver to assess an acceptable price for a given feedstock.
There, however, many other factors that can and must be taken into account. I expect talks during Carbon Black World to be very relevant to this discussion. Paul Ita’s presentation on the global outlook for carbon black, Shane Perl’s view on viewing feedstock costs in the context of total value, and Vince Guercio’s presentation on raw materials and feedstocks will no doubt be among the most important for this critical piece of the industry.
Additionally, in December 2014 with extremely high oil prices, feedstocks represented more than 80% of the total manufacturing costs for carbon black. Today it is down to around 50-55%. This leads fixed costs to become much more visible – and thus why I am presenting about the importance of looking beyond yield when considering feedstocks. This is going to give an incentive to the appropriate feedstock quality to increase timely throughput and minimize off quality production.
At the present, feedstock availability as such does not look to be an issue - but feedstocks of acceptable quality may become one. As the oil industry extracts more and more carbon from their products, it makes lighter and lighter feedstocks available. Many debottlenecking projects are announced - without real inventory of existing raw materials. To overcome some of these hurdles, traditional carbon black producers will need to invest in costly de-pollution systems.
In this context, it is also important to consider a certain number of alternative feedstocks such as natural gas, vegetable oil or any recovered oil. These projects are at the moment marginal volumes - but could open a brand new market if they are able to produce the same carbon black quality. Tire pyrolysis – and the presentation from Carl McAfee on the topic – may also be considered as a potential alternative.
At the end of the discussion, remember that to produce carbon black, you need to extract the carbon from an organic molecule and put it in the appropriate form - at an acceptable cost.
This is our job, our science, our passion."
To hear François Terrade present Feedstocks: More than Just Yield at Carbon Black World 2016, register here.