China carbon black prices surge on coal-tar supply squeeze

Beijing – Carbon black prices in China have risen sharply amid a squeeze on coal-tar supplies and escalating raw-material costs, according to the China Rubber Industry Association (CRIA).

Some carbon black grades have exceeded Yuan10,000 (€1,280) per tonne and are approaching Yuan12,000/tonne (€1,540), CRIA said in an 11 Sept statement.

CRIA linked the price increases to ‘high-temperature coal tar,’ a key carbon black feedstock material.

According to the association, prices for coal tar have risen for two consecutive months, including a "significant jump" during the past week.

CRIA described the development as "cost transmission in the coal industry chain", beginning with a tightening supply of coking coal.

Since the start of the year, CRIA explained, coal mines in major producing regions have faced safety inspections and environmental supervision.

This has delayed the restart of previously closed mines and created "a significant supply shortage of high-quality coking coal."

With inventories at “historically low levels,” and high demand ahead of China's ‘mid-autumn festival’, CRIA said coal tar prices have reached "beyond expectations."

For carbon black manufacturers, the impact is particularly significant as coal tar represents between 65% and 80% of production costs.

"Its price jump directly pushes up the production cost of carbon black," CRIA said.

The association emphasised that higher carbon black prices were 'passive behaviour of cost transmission' and did not indicate strong profitability among Chinese producers.

"From the perspective of the industry as a whole, most carbon black companies are still in a state of loss or marginal profit," it said.

CRIA said it expected industry losses to increase significantly during September.

"Based on current coal tar market prices, the industry's total losses in September are expected to exceed Yuan120 million," it said.

CRIA warned that carbon black suppliers are becoming increasingly unable to meet existing supply commitments at previously agreed prices, according to the association.

As a result, the association warned tire and rubber-product manufacturers against "panic buying" and urged them to respond cautiously rather than accelerating purchases.

Downstream companies should "view this round of price increases rationally, purchase according to demand, and make reasonable arrangements for inventory," it said.