Birla Carbon will change all North America contract price formulas from August 1, 2019. The long-used index up to this date, U.S. Gulf Coast High Sulfur Fuel Oil, will change to U.S. Gulf Coast 0.5 percent Sulfur Fuel Oil. Feedstock to make carbon black is sourced from markets driven by marine fuel. This market is undergoing fundamental changes driven by regulations widely known as MARPOL 2020 or IMO 2020, which establishes the maximum allowable sulfur content in marine fuel at 0.5 percent. While this regulation is effective January 1, 2020, the supply chain is adjusting now.
Naturally, these changes have impacted carbon black feedstock markets. The high sulfur index historically used in carbon black price formulas no longer reflects the markets in which feedstock is procured. Therefore, this change is necessary to ensure a sustainable supply of carbon black. Carbon black price formula changes in other parts of the world will be communicated separately, consistent with the timing and manner in which those markets are impacted.
Birla Carbon remains committed to serving its customers in every region of the world and making the necessary adjustments so that it is able to continue to do so. Representatives from Birla Carbon will be in contact with customers, a company statement said.