SunSirs: Amid the Tug-of-War Between Surging Raw Material Costs and Sluggish Demand, the Weekly Price Increase for Carbon Black Widened

Price trend

Data monitored by SunSirs indicates that carbon black market prices primarily trended upward last week. As of the 21st, the domestic market price for N220 carbon black stood at 8,864.29 RMB/ton, marking a 4.46% increase from the 8,485.71 RMB/ton recorded at the beginning of the week and a year-on-year rise of 21.93%.

Market analysis

Regarding raw materials, the coal tar market saw a significant surge last week. As of August 20, mainstream transaction prices for high-temperature coal tar in Shandong rose to 4,340-4,370 RMB/ton, an increase of 290-320 RMB/ton compared to the Thursday of the week prior. Production cuts by coking enterprises led to tight coal tar supplies, while increased purchasing activity from downstream sectors drove prices upward. This strong rally in raw material prices provided substantial cost support for the carbon black market.

Regarding supply, the operating rate of the carbon black industry rose last week. The operating rate stood at 67.73%, up 1.98 percentage points from the week prior to last. Some large enterprises increased production loads to fulfill orders, and there are currently no new plans for maintenance shutdowns among manufacturers. However, some plants in the Shandong region remain under maintenance. Market participants have shown increased enthusiasm for maintaining or ramping up production.

Regarding the end market, capacity utilization rates among downstream tire manufacturers have seen a slight uptick, yet overall demand-side support remains limited. As the market is currently in a traditional off-season, there is a lack of essential demand driving activity. Downstream tire manufacturers show limited willingness to accept high-priced orders, placing carbon black producers under some pressure to move inventory. Market transactions are primarily driven by essential needs and pre-existing orders, with actual sales volumes falling short of expectations.

Influencing factors: Cost factors are the primary driver of the current market trend, with a sharp rise in coal tar prices pushing up carbon black production costs. In terms of price levels, the current 60-day price sits in the medium-to-high range, while prices over the 3-month and 1-year periods are at high levels, leaving limited room for further increases. Additionally, low inventory levels at some carbon black enterprises provide a degree of price support.

Market Outlook:

Last week, carbon black prices saw accelerated gains driven by rising costs, though weak downstream demand limited the volume of high-priced transactions. In the short term, the price of the raw material coal tar may continue to rise, sustaining cost support. However, given the lack of substantial improvement in demand and the fact that prices are already at high levels, the carbon black market is expected to fluctuate within a high range next week, with the pace of price increases likely to narrow gradually.

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