Cabot's Tire Carbon Black Margin Fell From 21.7% to 16.5% After 2026 Contract Resets

Cabot Corporation's Reinforcement Materials segment, the rubber-grade carbon black business that sells mainly to tire makers, earned segment EBIT equal to 16.5% of sales in fiscal 2026, down from 21.7% a year earlier. In its results release dated November 2, 2026, Cabot reported segment EBIT of $379 million for the year to September 30, against $508 million in fiscal 2025, a fall of 25.4% on sales that slipped only 1.9%, from $2,341 million to $2,297 million.

The company named the cause plainly: gross profit per ton declined "primarily due to the outcomes of our calendar year 2026 customer agreements." In other words, the price reset that tire makers negotiated for 2026 did more damage than any loss of tonnage. By the fourth quarter (July to September 2026), Cabot's segment volumes were up 5% year on year, yet segment EBIT was still down 26.9%, at $87 million against $119 million. For tire makers, carbon black buyers and investors, the numbers mark the end of a stretch in which carbon black suppliers held the pricing power.

Cabot's carbon black margin lost 5.2 points in a single contract cycle

The fiscal 2026 result breaks a climb that ran from the pandemic low to fiscal 2025. Segment EBIT was $162 million in fiscal 2020 on sales of $1,256 million, a margin of 12.9%. It more than tripled to a peak of $537 million in fiscal 2024, a rise of 231.5%. The margin peaked a year later, at 21.7% in fiscal 2025, because sales fell faster than earnings that year.

Cabot's own words across those years show where the gains came from. In November 2021, it pointed to "higher pricing in our calendar year 2022 customer agreements as customers are placing a premium on supply security." Two years later it cited "improved unit margins from better pricing and product mix in our calendar year 2023 customer agreements" and expected "higher pricing and improved product mix" in its 2024 agreements. Each annual contract round moved in the supplier's favor for three years in a row.

Fiscal 2026 is the first year in that series when the contract round clearly went the other way. Cabot flagged it early: its first-quarter release of February 3, 2026 said its outlook "incorporates the outcome of negotiations for our calendar year 2026 tire customer agreements" and narrowed full-year adjusted EPS guidance to $6.00 to $6.50. Cabot delivered $6.42, against $7.25 in fiscal 2025.

Fiscal year	RM sales ($M)	RM segment EBIT ($M)	RM EBIT margin	PC segment EBIT ($M)	RM share of segment EBIT
FY2020	1,256	162	12.9%	n/c	n/c
FY2021	1,781	329	18.5%	n/c	n/c
FY2022	2,673	408	15.3%	234	63.6%
FY2023	2,563	482	18.8%	125	79.4%
FY2024	2,610	537	20.6%	164	76.6%
FY2025	2,341	508	21.7%	194	72.4%
FY2026	2,297	379	16.5%	235	61.7%

RM = Reinforcement Materials; PC = Performance Chemicals. n/c = not comparable, because the FY2021 release used an older three-segment structure. FY2022 figures are as recast in the FY2023 release. Margins and shares are Radial Insights calculations from Cabot's reported figures.

Every quarter of fiscal 2026 ran 21% to 29% below the year before

The decline was not a single bad quarter. Segment EBIT came in at $102 million, $93 million, $97 million and $87 million across the four quarters of fiscal 2026, against $130 million, $131 million, $128 million and $119 million a year earlier. The year-on-year falls were 21.5%, 29.0%, 24.2% and 26.9%. That steady gap is what a contract reset looks like: annual agreements set the price per ton from January, and the lower unit margin carries through every quarter that follows.

Segment sales tell a different story from earnings. Fourth-quarter sales rose 12.6%, from $563 million to $634 million, while EBIT fell. The fourth-quarter EBIT margin was 13.7%, against 21.1% a year earlier and 19.6% in the first quarter of fiscal 2026. Sales in a feedstock-heavy business can move with oil-linked input costs and currency as well as tonnage, so dollar EBIT is the cleaner read on what buyers are paying above cost. On that measure, Cabot earned $32 million less in its latest quarter than a year before, on more tons.

Volumes recovered by the fourth quarter, except in Europe

The tonnage picture changed sharply within the year. In the first quarter (October to December 2025), Reinforcement Materials volumes fell 7% globally, with the Americas down 15% and Asia Pacific down 7%, while Europe, the Middle East and Africa rose 6%. Cabot blamed "lower production levels and year-end inventory management by our tire customers in the Americas," and its outlook pointed to "elevated levels of tire imports into the western geographies of Europe and the Americas."

By the fourth quarter, global volumes were up 5%, Asia Pacific up 10% and the Americas up 3%, while Europe, the Middle East and Africa fell 7%. Cabot attributed the growth to "our capacity addition in Indonesia and our acquisition in Mexico," which means part of the recovery is new capacity and acquired tons rather than a rebound at existing customer plants. The European figure fits the concern Cabot raised a year earlier: its fiscal 2025 release of November 3, 2025 described "lower production levels at our tire customers given the higher levels of tire imports from Asia," and warned of "elevated Asian tire imports into western regions." Carbon black demand follows where tires are built, not where they are sold.

Performance Chemicals now carries 38% of Cabot's segment profit

The contract reset changed the shape of the company. Performance Chemicals, which covers specialty carbons, battery materials and other non-tire products, lifted segment EBIT 21.1% in fiscal 2026, from $194 million to $235 million, on sales of $1,319 million. Reinforcement Materials' share of combined segment EBIT fell from 72.4% in fiscal 2025 to 61.7%, the lowest in the five comparable years and well below the 79.4% of fiscal 2023. Performance Chemicals took the remaining 38.3%.

Cabot's guidance reflects that tilt. For fiscal 2027 it expects adjusted EPS of $6.15 to $6.75, a midpoint of $6.45 that is close to the $6.42 just reported. The growth drivers it named are battery materials, electronics and strategic customer accounts, and the release separately announced a $50 million US Department of Energy grant for conductive additives for batteries. It gave no segment guidance and no figure for its calendar 2027 tire agreements. Flat group guidance with growth in battery and specialty lines leaves little room for a rebound in tire carbon black pricing in the plan.

Tire prices themselves have barely moved. The US producer price index for tire manufacturing stood at 223.329 in September 2026 (June 1981 = 100), up 0.68% from 221.821 in September 2025, after a 2.47% rise the year before from 216.472. The index is still 31.8% above its 2019 average of 169.45, according to BLS data published by FRED. Tire makers facing flat selling prices and import competition had every reason to push back hard on a raw material whose supplier margin had reached 21.7%.

What the reset means for tire makers, buyers, distributors and investors

Tire makers. The 2026 round shows that carbon black pricing is negotiable again. Cabot's segment EBIT per dollar of sales fell 5.2 percentage points in one contract cycle, which is the clearest public measure of what buyers recovered. Procurement teams heading into calendar 2027 talks can note that part of Cabot's fourth-quarter volume growth came from new capacity in Indonesia, which adds supply to the region.

Raw-material buyers in Europe. The region was the only one where Cabot's volumes fell in the fourth quarter, down 7%. A supplier with spare European capacity has a reason to compete for tons. Buyers should track local plant loading as closely as list prices.

Distributors and replacement-tire sellers. Lower carbon black margins do not translate into lower tire prices on their own. With the US tire PPI up only 0.68% in a year, the saving is more likely to rebuild tire maker margins than to reach the shelf.

OEMs. The rise of Asia Pacific volumes, up 10% in the fourth quarter, and Cabot's Mexican acquisition both point to carbon black supply following tire production into lower-cost regions. OE buyers sourcing tires from Mexico or Southeast Asia are buying into the regions where reinforcement capacity is growing.

Investors. Reinforcement Materials still produced $379 million of segment EBIT, more than double fiscal 2020. The question for 2027 is whether the 16.5% margin is a new floor. The fourth-quarter margin of 13.7% suggests the fiscal year-end run rate was below the annual average, and Cabot's guidance does not count on tire carbon black to close the gap.

For the wider supply picture, see Radial Insights coverage of the tire carbon black market, the carbon black feedstock oil market and the recovered carbon black market.

Methodology and sources

All Cabot figures are taken from the company's own results releases, filed as Exhibit 99.1 to Form 8-K with the US Securities and Exchange Commission. Cabot's fiscal year ends September 30, so fiscal 2026 runs from October 2025 to September 2026. EBIT margin is segment EBIT divided by segment sales; the share of segment EBIT is Reinforcement Materials EBIT divided by the sum of Reinforcement Materials and Performance Chemicals EBIT. Both are Radial Insights calculations. Sales for fiscal 2022 were recast by Cabot in its fiscal 2023 release, and Performance Chemicals figures before fiscal 2022 are not comparable because of a change in segment structure.

• Cabot Corporation, Q4 and fiscal year 2026 results release, November 2, 2026: FY2025 and FY2026 segment sales and EBIT, quarterly EBIT, Q4 regional volumes, adjusted EPS, FY2027 guidance, commentary on calendar 2026 customer agreements.
• Cabot Corporation, Q1 fiscal year 2026 results release, February 3, 2026: Q1 regional volumes, Q1 sales and EBIT, guidance and comments on tire imports and 2026 agreements.
• Cabot Corporation, Q4 and fiscal year 2025 results release, November 3, 2025: FY2024 and FY2025 segment figures, comments on Asian tire imports.
• Cabot Corporation, Q4 and fiscal year 2023 results release, November 6, 2023: FY2022 (recast) and FY2023 segment figures, comments on 2023 and 2024 agreements.
• Cabot Corporation, Q4 and fiscal year 2021 results release, November 8, 2021: FY2020 and FY2021 Reinforcement Materials figures, comments on 2022 agreements.
• US Bureau of Labor Statistics via FRED, Producer Price Index by Industry: Tire Manufacturing (PCU3262132621): September 2024, 2025 and 2026 values and the 2019 annual average.