Orion S.A., a major supplier of rubber-grade carbon black to Western tire plants, earned $38.2 million of adjusted EBITDA in its Rubber Carbon Black segment in the first half of 2026, down 57% from $89.7 million a year earlier. Volume did not cause it. Orion shipped 192.5 thousand metric tons (kmt) of rubber black in the first quarter of 2026, slightly more than the 189.8 kmt of a year earlier, yet segment earnings per ton fell to about $99, against $215 in the same quarter of 2025 and $312 across 2023.
The cause is the 2026 annual supply contracts. Both Orion and its US-listed peer Cabot Corporation tell investors that the price outcomes of their calendar-year 2026 tire customer agreements drove the decline, after a year in which lower-tier tire imports from Asia cut tire production in the Americas and Europe. For tire makers this is a rare buyer's market in a concentrated input. For carbon black producers it is a margin reset that is already forcing plant closures, which will shape how much local supply exists when Western tire output recovers.
Orion's tire-grade earnings per ton fell from $312 in 2023 to $99 in early 2026
Rubber Carbon Black, which supplies tire and rubber goods makers, is Orion's larger segment: in 2025 it accounted for 65.8% of Orion's revenue, 75.4% of its volume and 62.3% of its adjusted EBITDA, according to the company's 2025 annual report.
The segment's profit cycle over five years is unusually clean. Adjusted EBITDA rose from $120.0 million in 2021 to $168.4 million in 2022 and peaked at $221.6 million in 2023. It then slipped to $194.1 million in 2024 and $154.5 million in 2025. Dividing by segment volume gives a per-ton view that strips out the size of the business: $171 in 2021, $228 in 2022, $312 in 2023, $282 in 2024 and $216 in 2025.
The quarterly path shows when the step change happened. Segment EBITDA was $40.8 million in the first quarter of 2025 and $48.9 million in the second, then fell to $36.1 million in the third and $28.7 million in the fourth as Western tire customers cut production. In 2026 it dropped to $19.0 million in the first quarter and $19.2 million in the second. The segment EBITDA margin, measured against segment net sales, went from 15.9% in the second quarter of 2025 to 6.1% a year later.
| Orion Rubber Carbon Black | Volume (kmt) | Net sales ($M) | Adjusted EBITDA ($M) | EBITDA per ton ($) | EBITDA margin |
|---|---|---|---|---|---|
| 2021 | 701.1 | 948.6 | 120.0 | 171 | 12.7% |
| 2022 | 738.6 | 1,355.5 | 168.4 | 228 | 12.4% |
| 2023 | 710.7 | 1,283.3 | 221.6 | 312 | 17.3% |
| 2024 | 689.0 | 1,231.2 | 194.1 | 282 | 15.8% |
| 2025 | 714.8 | 1,188.2 | 154.5 | 216 | 13.0% |
| Q1 2026 | 192.5 | 289.8 | 19.0 | 99 | 6.6% |
| H1 2026 | n/d | 605.9 | 38.2 | n/d | 6.3% |
Per-ton and margin figures are Radial Insights calculations. Orion did not disclose second-quarter 2026 tonnage (n/d).
Volume held up while price fell: the 2026 contract round explains most of the drop
The striking feature of 2026 is that Orion's tonnage barely moved. First-quarter rubber volume rose 1.4%, helped by Europe, the Middle East and Africa and by Asia Pacific. Second-quarter volume fell 3%. Over the same two quarters segment net sales went from $625.3 million to $605.9 million, a drop of only 3%, because carbon black prices include a pass-through of oil-based feedstock costs that rose in 2026. Orion's filings attribute the higher oil prices to the conflict in the Middle East.
Earnings tell a different story. In its second-quarter 2026 Form 10-Q, Orion breaks down the 61% fall in quarterly segment EBITDA into a 22% unfavorable pricing effect, "owing primarily to annual contract agreements", a 20% unfavorable pass-through effect of raw material costs and a 14% unfavorable regional mix, partly offset by a 4% favorable currency effect. For the first half the pricing effect was 23%, the regional mix effect 16% and the raw-material timing effect 15%.
Orion flagged this in February 2026. Its fourth-quarter release said that "pricing outcomes from our negotiations for this year's supply agreements coupled with flat to slightly lower volumes" were the main factors bridging 2025 earnings to 2026, and it set a 2026 company-wide adjusted EBITDA guidance range of $160 million to $200 million, against $248.0 million achieved in 2025. In August it reaffirmed a range of $170 million to $210 million. The midpoint of that range, $190 million, is 23% below 2025. Net debt stood at 4.4 times adjusted EBITDA at the end of June 2026.
Carbon black supply contracts with tire makers are typically set once a year, with formulas that pass feedstock oil costs through to customers. That structure is why a single negotiating round can move a year of earnings. The 2026 agreements were negotiated in late 2025, while Western tire plants were running at what Orion called "subdued rates" after the 2025 import surge, and the outcome now runs through every quarter of 2026.
Cabot shows the same pattern: Reinforcement Materials EBIT down 25% in nine months
Cabot's Reinforcement Materials segment, its tire and rubber carbon black business, gives an independent check. Its fiscal year ends in September. Segment EBIT climbed from $408 million in fiscal 2022 to $482 million in fiscal 2023 and $537 million in fiscal 2024, then eased to $508 million in fiscal 2025, a 5% decline that Cabot linked to lower volumes.
Fiscal 2026 is a sharper break. Segment EBIT was $102 million in the quarter to December 2025, down 22%, as Americas volumes fell 15% on lower tire production and year-end inventory cuts. In the quarter to March 2026 EBIT fell 29% to $93 million even though volumes rose 3%, which Cabot attributed to "lower pricing and product mix in our calendar year 2026 tire customer agreements". In the quarter to June 2026, EBIT fell 24% to $97 million on a 5% volume gain, again driven by "lower gross profit per ton, primarily due to the outcomes of our calendar year 2026 customer agreements". Over nine months, segment EBIT was $292 million against $389 million, a 25% fall.
Cabot's decline is smaller in percentage terms than Orion's, partly because its own volumes grew. Cabot finished an expansion at Cilegon, Indonesia in 2025 that added about 80,000 metric tons of reinforcing carbons capacity, and its third-quarter volumes also included a plant acquired in Mexico. Even so, both companies point to the same mechanism: tonnage roughly stable or rising, with gross profit per ton reset lower by the 2026 contract round.
Western tire imports drove the reset, and both suppliers are now cutting capacity
The demand backdrop is set out in the companies' own language. Cabot's November 2025 results release tied a 7% fall in fourth-quarter Americas volumes to "higher levels of tire imports from Asia into the region". Orion's 2025 annual report states that its rubber segment "experienced softer demand in core Western markets, as key tire making customers reduced production rates because they were impacted by elevated levels of typically low value tire imports from Asia". Its February 2026 release described "historically high levels of lower-tier tire imports into the Western Hemisphere".
When local tire plants run slower, carbon black plants built to serve them lose loading, and suppliers compete harder for the remaining contracts. The supply side has started to respond:
- In July 2025 Orion said it would discontinue production on three to five carbon black lines in the Americas and EMEA by the end of 2025, citing the loss of local tire manufacturing share.
- In February 2026 Cabot said Reinforcement Materials demand "continues to be impacted by elevated levels of tire imports into the western geographies of Europe and the Americas" and listed capacity rationalization among its countermeasures.
- In May 2026 Cabot announced its intention to close manufacturing operations in South America and Europe, with annualized fixed cost savings of about $22 million once fully implemented.
- In August 2026 Cabot reported that it had ceased carbon black production at Campana, Argentina, and booked $42 million of global restructuring charges in the quarter.
Trade policy may change the volume picture before it changes prices. In its August 2026 release Orion's chief executive said that "recently implemented duties in the EU and 232 tariffs in the U.S." should "ultimately support local tire manufacturing rates" in Western regions, while noting that the rubber segment had not yet seen a meaningful benefit. Any recovery in local tire builds would reach carbon black volumes first and contract prices only at the next annual round.
What the margin reset means for tire makers, carbon black buyers, OEMs and investors
Tire makers with Western plants captured most of the value that left the carbon black producers in 2026. Orion's pricing effect alone was 22% of prior-year quarterly segment EBITDA. That gain is temporary. With Orion's segment margin near 6% and both majors closing lines, suppliers have little room to repeat the concession in the 2027 round, and procurement teams should plan for price recovery attempts rather than a further cut. Qualifying a second source for key grades now, while capacity is still available, is cheaper than doing it after more lines close.
Raw-material buyers should separate the two moving parts in carbon black invoices. The feedstock pass-through rose in 2026 with oil prices, which kept Orion's net sales close to flat, while the negotiated margin component fell. Contracts that index feedstock transparently make that split visible. Buyers weighing alternatives such as recovered carbon black or higher silica loadings should compare them against today's compressed virgin black margins, not 2023 levels.
Distributors and replacement-tire importers should watch the same trade measures from the other side. If US Section 232 tariffs and EU duties shift sourcing back toward local production, as Orion expects, landed costs of imported lower-tier tires rise while domestic tire output recovers, and the carbon black for that output will come from a smaller set of Western plants.
Vehicle makers buying original equipment tires are exposed indirectly. Cabot linked its weak December 2025 quarter to lower tire production in the Americas, and Orion attributed its 1% lower consolidated second-quarter volume to lower tire production rates in the Americas and softer original equipment manufacturer demand in the Americas and Asia Pacific. A thinner regional carbon black base raises supply risk for OE tire programs that require locally qualified grades.
Investors should treat the 2027 contract round, negotiated in late 2026, as the key event. Orion's guidance midpoint of $190 million implies about $86 million of company-wide adjusted EBITDA in the second half of 2026, after $104.3 million in the first, and its leverage of 4.4 times leaves limited room for another price concession. Cabot's February 2026 earnings outlook of $6.00 to $6.50 of adjusted earnings per share already incorporated the outcome of its calendar-year 2026 tire agreements. For background on demand drivers, see Radial Insights' tire carbon black market analysis and our coverage of highly dispersible silica, the main reinforcing filler competing with carbon black in tire treads.
Methodology and sources
All financial figures come from company filings with the US Securities and Exchange Commission. Per-ton earnings and margins are Radial Insights calculations: segment adjusted EBITDA divided by segment volume or segment net sales. Orion reports on a calendar year; Cabot's fiscal year ends on 30 September, so Cabot's fiscal 2026 first quarter covers October to December 2025. Orion's segment uses adjusted EBITDA and Cabot's uses segment EBIT, so the two are compared by direction and percentage change, not in dollars. Cabot's fiscal 2025 first-quarter EBIT ($130 million) is derived from the reported $28 million year-on-year decline.
- Orion S.A. Form 10-K for 2025 (filed February 2026): rubber segment volume, net sales and adjusted EBITDA for 2024 and 2025; segment shares; import commentary.
- Orion S.A. Form 10-K for 2024 (filed February 2025): segment data for 2023 and 2024.
- Orion S.A. Form 10-K for 2022 (filed February 2023): segment data for 2021 and 2022.
- Orion S.A. Q3 2025 earnings release (4 November 2025): Q3 2025 segment adjusted EBITDA.
- Orion S.A. Q4 2025 earnings release (17 February 2026): Q4 segment data, 2026 guidance, contract commentary.
- Orion S.A. Form 10-Q for Q1 2026 (May 2026): Q1 segment volume, sales and EBITDA.
- Orion S.A. Form 10-Q for Q2 2026 and Q2 2026 earnings release (5 August 2026): Q2 and H1 segment data, EBITDA bridge, guidance, leverage, tariff comments.
- Orion S.A. press release on line rationalization (8 July 2025): three to five lines in the Americas and EMEA.
- Cabot Corporation Form 10-K for fiscal 2023 and Form 10-K for fiscal 2025: Reinforcement Materials EBIT for fiscal 2022 to 2025; Cilegon expansion.
- Cabot Q4 fiscal 2025 release (3 November 2025), Q1 fiscal 2026 release (3 February 2026), Q2 fiscal 2026 release (5 May 2026) and Q3 fiscal 2026 release (3 August 2026): quarterly segment EBIT, regional volumes, contract and restructuring commentary.
Frequently Asked Questions
57%. Orion's Rubber Carbon Black adjusted EBITDA fell to $38.2 million in H1 2026 from $89.7 million, and Cabot's Reinforcement Materials EBIT fell 25% to $292 million in the nine months to June 2026.
1.4% higher: Orion's Q1 2026 rubber volume rose to 192.5 kmt, and Cabot's Reinforcement Materials volumes rose 3% and 5% in the March and June 2026 quarters, so demand did not collapse.
22%: that is the unfavorable pricing effect Orion's Q2 2026 filing attributes to annual contract agreements. Cabot also cites its calendar-year 2026 tire agreements, signed after a year of elevated lower-tier tire imports into Western markets.
$99 of adjusted EBITDA per metric ton in Q1 2026, versus $216 in 2025 and $312 in 2023, based on reported segment EBITDA and volume.
Three to five lines: Orion said in July 2025 it would stop that many lines in the Americas and EMEA by the end of 2025, and Cabot announced closures in South America and Europe worth about $22 million of annualized savings.
6.1%: with Orion's Q2 2026 segment margin at that level and net debt at 4.4 times EBITDA, suppliers have little room for further price cuts, so buyers should plan for attempts to recover price.