European carbon black market forecast to "tighten"

Hanover, Germany – Pressure on carbon black supply in Europe is set to increase over the coming months as regional trade issues continue to impact the global market for the rubber reinforcement material.

That’s according to Paul Ita, principal, Notch Consulting Group, who estimates global demand for carbon black at 13.7 million tons in 2023, of which tires accounted for 73% of demand.  

Between 2022 and 2027, carbon black demand from the tire industry will show an AGR of around 3.8%, Ita said at the recent Tire Tech Expo.

In a conference presentation, Ita described 2023 as a “challenging year” for the carbon black industry, with volumes flat overall globally.

The situation, he said, largely reflected "prolonged destocking in the light vehicle and commercial vehicle replacement markets of Europe and North America.”

These negative trends, which were only partially offset by improved OE demand, persisted much longer than expected, added the US-based market analyst.

Globally, plant utilisation fell to 69% – its lowest level in more than 20 years, excluding during the Covid pandemic – in part because1.6 million tons of new carbon black capacity was added in 2022/23.

The presenter went on to note how "regional trade issues have emerged as a major factor in global supply & demand in the carbon black sector.”

As of July 2024, for instance, the EU will ban carbon black imports from Russia, which represent up to 30% of European demand, he noted.

And, with Russia now shifting exports to Turkey, China and southeast Asia, Ita noted “a big shift going on globally in terms of those trade flows.”

Another noteworthy development, said the Notch principal, was the emergence of India as an exporter to western regions.

Indeed, Ita expects India “to become the swing producer for the world over the next few years, based on capacity expansion plans [there].”

To date, he continued, the overall impact of market-shifts and geopolitical disruptions has “been muted as demand has been very soft since the second half of 2022 and all through 2023.”

However, added Ita, there is currently “a premium on domestic supply in North America and the EU. [Local supply] is very prized right now, as people don't want to extend their supply-chains.”

While this hasn’t been such a concern amid sufficient material availability, the analyst forecast pressure on domestic supply to intensify “as the market tightens over next three-to-six months, which I believe will happen.”

As an indicator, Ita presented Notch data showing that carbon black plant utilisation in the EU recovered to about 87% last year, from around 77% in 2022.

This, said Ita, reflected a reduction in Russian imports, as well as domestic suppliers “pushing hard to get as much material produced as they could because it was a good year for local demand.”

Overall, EU plant utilisation is expected to remain in the “mid- to high-80s” in 2024, amid a pick-up in demand and declining imports – Russian volumes being only partly replaced by imports from countries such as India and China.

“Europe's net import position has really significantly reduced over the last 18 months and I expect that to remain really low going forward," commented Ita.

We will report further on this topic via ERJ On-line and in the May/June issue if European Rubber Journal magazine.