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Asia Carbon Industries adding power plant, upgrading carbon black capacity to specialty grades

On May 15, Asia Carbon Industries announced results for the quarter ended March 31, 2013. Net sales for the quarter totaled $5,963,945, down 53% from the same quarter of 2012. Income for the quarter was $389,953, down 78% from the same quarter of 2012. This sharp drop in sales and income were attributable to a major conversion project that the company is carrying out on three of its four production lines, which are being upgraded to produce specialty grades of carbon black, which is expected to be completed in 3Q 2013. This project was explained in detail in the company’s previous quarterly results announcement:

In the fourth quarter of 2012, the Company began converting its three dry production lines to special carbon black (“SCB”) production lines. SCB has a broader range of use compared to the more traditional products including use as a pigmenting agent, UV stabilizer or conductive agent in a variety of products, such as plastics, toners and printing ink and coating, battery and electrical parts. Management believes SCB will generate more revenues as a result of higher sales prices. The conversion affected the Company’s operating results of 2012 since the three dry production lines ceased operations during the fourth quarter. The cost of the project is estimated at $4 million and will be funded by the cash from the Company’s operations.

In addition to the product upgrades, in June 2012, Asia Carbon Industries began construction on a 3000 KW power plant that uses residual exhaust gas generated by carbon black manufacturing. The new power plant is expected to satisfy the company’s electricity needs for its current production lines. The cost of the construction of the plant is $6.4 million, and also was funded with cash from operations. In March 2013, the company reported that the new power plant was complete and in its testing phase.

The company’s current product line consists of two hard grades (N220 and N330) and one soft grade (N660) as well as naphthalene oil, a by-product of its production process.

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