SunSirs: Carbon Black Prices Struggle to Gain Further Momentum

According to China Chemical News, the carbon black market began a modest rebound in mid-November, driven by rising raw material coal tar prices and declining operating rates in the carbon black industry. Data shows that as of December 4, the mainstream quotation for N330 carbon black in the Shandong market of East China stood at RMB 5,900 per ton, up RMB 300  from November 3.

Currently, the raw material coal tar market is consolidating at elevated prices, with expectations of further declines in carbon black production capacity utilization. Meanwhile, downstream industries like tires are anticipated to increase production rates. In the short term, the market price for N330 carbon black in Shandong is expected to fluctuate within the range of RMB5,800 to 6,200.

Upside Momentum Gradually Weakening

Since mid-November, multiple rounds of bidding price hikes in the high-temperature coal tar market have directly pushed up carbon black production costs. On November 13, the auction price for high-temperature coal tar at Laiwu Branch of Shandong Iron and Steel Co., Ltd. surged by RMB 310  in a single day, ultimately closing at RMB 3,340, boosting market sentiment for buying on the rise. On November 26, Laiwu Steel's medium-high temperature coal tar auction price rose to RMB 3,380 , continuing the upward trend.

During the week of December 4, the increase in coal tar tender prices narrowed significantly, yet cost pressures continued to be passed on to the carbon black industry. Data indicates that during the week of December 4, the mainstream transaction price for high-temperature coal tar in Shandong remained at RMB 3,460 , up RMB 10 from the previous period.

High-temperature coal tar accounts for 60% to 70% of carbon black production costs. Its price increases translate into significant cost pressures for the carbon black industry. However, as the earlier positive factors for high-temperature coal tar have been gradually absorbed, there is currently insufficient momentum for further price hikes.

Supply-Demand Structure Still Needs Optimization

The 2025 carbon black market exhibited ample supply throughout the year. Substantial inventory accumulated at the beginning of the year kept the supply side consistently abundant, while downstream demand failed to keep pace. Overall growth momentum remained weak, dragging down carbon black prices.

On the supply side, high social inventory at the beginning of the year was the core reason for the year's abundant supply. Despite a slight year-on-year decline in production due to reduced operations among small and medium-sized enterprises, output remains near the high range of the past five years. Demand patterns diverged, with growth in full-steel tire demand offset by declines in semi-steel tires and other products. This limited the increase in domestic carbon black consumption, making it difficult to effectively absorb the high inventory accumulated at the beginning of the year. Consequently, the magnitude and duration of price support efforts throughout the year fell short of expectations.

Since the fourth quarter, tire manufacturers' production rates have rebounded, yet this has had a limited impact on carbon black demand. According to statistics from Zhuochuang Information, carbon black inventory at the beginning of November stood at 521,400 metric tons, rising to 534,600 metric tons by month-end, indicating that inventory pressure continues to accumulate.

During the week of December 4, supply-demand pressures eased slightly. On the supply side, production rates at carbon black plants rose marginally due to supply-guarantee policies. According to Longzhong Information, the operating rate of sampled carbon black enterprises reached 70.22% during the week of December 4, up 0.55 percentage points week-on-week. On the demand side, capacity utilization rates for sampled semi-steel tire manufacturers reached 68.33%, up 2.33 percentage points month-on-month, while those for full-steel tire manufacturers stood at 64%, rising 1.25 percentage points. Despite expectations of increased capacity utilization among tire manufacturers, the impact on driving up carbon black prices remains limited.

Corporate Profitability Remains Under Pressure

Caught between persistently high raw material costs and sluggish product price growth, carbon black enterprises faced sustained profitability pressures throughout 2025. Although November saw cost support from rising coal tar prices, carbon black prices only underwent a narrow adjustment, limiting the effectiveness of corporate profit recovery.

Data indicates that as of December 4, theoretical profits for N330 carbon black at Shandong plants stood at -696 yuan, a 16-yuan decline from the previous cycle. During the week of December 4, high-temperature coal tar prices in Shandong rose by CNY 10 compared to the previous cycle, further intensifying cost pressures. While the carbon black market showed willingness to raise prices, downstream enterprises strongly resisted high quotations, creating significant resistance to actual order increases. This led to a further expansion of losses across the carbon black industry.

In the next cycle, Shandong's coal tar market prices may see a pullback from current highs, though the decline is expected to be limited. This downward pressure on the carbon black industry will be relatively mild. However, end-user tire manufacturers' willingness to negotiate price reductions remains unchanged, capping the upside potential for carbon black market prices. Carbon black producers are projected to continue operating at a loss.

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