Not a subject matter expert. My answers as below.
- I think the cost of product varies with each grade. As an example, one of the largest manufacturers of virgin carbon black in India (PCBL) N550 sells it around Rs.150/kg, whereas Hi-green recovered carbon black SS550 is available at Rs.35/kg. I guess, at the end, the choice of grade depends on the end user application.
- India imports most of its carbon black from China, US and Korea. I think the key risk whether it is import or local is going to be price, which I think the company has already mentioned as one the risks (Price is the main factor in most cases for client making decision to have their products). I am assuming they are mitigating this risk through good relations with the clients and offering a quality product at competitive price.
- Yes, it is quite possible as increasing environmental regulations, rising awareness about sustainable materials, and the need for circular economy solutions are expected to drive the market further, so are the new players entering the market. However, as the company claims they produce the product using a patented technology which matches or even surpasses the costly virgin carbon black gives me an impression that they have some kind of moat over other unorganized domestic players. Also, the recovered carbon black business is built on a waste management of tires. So if a tire company decides to put a new rCB plant, that may not be more for a backward integration, rather to manage the tire waste and to comply with govt’s EPR policy.
Disc: My views may be biased. Not a buy recommendation.
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