Overview Asia Carbon Industries Inc. is a China-based producer of a series of high quality carbon black products under the brand name "Great Double Star." The Company was established in 2003 in Shanxi, China's highest coal producing province. Asia Carbon Industries is one of the top ten carbon black producers in the province and has established relationships with a high-profile customer base. The Company is in the process of expanding its manufacturing capacity to meet growing demand for its products. The Market Opportunity According to a report from the Freedonia Group, the world market for carbon black is 9.4 million metric tons and is forecast to rise 4.3 percent annually through 2013, with the Asia/Pacific region posting the strongest gains.   According to a report by Dong Fang Securities, the rubber industry accounts for 89.5% of worldwide carbon black output, 67.5% of which is used for tire manufacturing, 9.5% is used for other rubber car parts (such as fan belts, bumpers, etc.). Other industries account for 10.5%.   China is the world’s second largest producer of carbon black and demand continues to increase for a variety of reasons. Domestically, China has experienced substantial economic growth in the past decade and the growing middle class has resulted in a burgeoning automobile industry. Data released on March 1 by the National Bureau of Statistics of China show that the number of registered automobiles for civilian use reached 90.86 million units at the end of 2010, up 19.3% from a year earlier. The tire demand in the aftermarket is also on healthy ground. Vehicle owners have replaced about 100 million tires in 2009, which represented about 11% of global sales. The demand for replacement tires is about twice that for OEM tires, accounting for more than two- thirds of the domestic tire market. Asia Carbon stands to benefit from this trend, as an estimated 89% of its sales are to automotive and related companies.   Products and Technology Carbon black is a deep, black powder with a number of applications. Derived from the controlled combustion of coal tar or residual oil feedstock, carbon black's desirable chemical properties make it a critical raw material for many industries. It is widely used within the rubber industry as a reinforcing filler; the paint and coating industry use carbon black as a coloring agent and it is used in batteries as a conductive agent. The vast majority of carbon black is used by the tire industry, where it can improve rubber's strength, wear resistance, and life span, and thus lowers the overall cost of tire products. Asia Carbon Industries currently manufactures three carbon black products, one hard and two soft, each of which has a relatively high profit margin. The price of hard carbon black is slightly higher than that of soft carbon black. Although the cost of hard carbon black is a little higher than that of soft carbon black, the demand for hard carbon black is significantly higher than the demand for the soft. The Company also sells Naphthalene Oil, a byproduct of its manufacturing process.