China Carbon Black Continues Its Bearish Run in January 2022

After finishing 2021 on a weaker note, China Carbon Black is yet to observe a change in momentum as sluggish demand and stable cost pressure continue to deter market sentiment. Carbon Black prices went downwards in H2 of Q4, and since then prices have remained on a bearish rally into Q1 2022.

Carbon black prices have dropped by more than 9.6% since the beginning of December 2021. Weakening demand fundamentals from downstream rubber industry have adversely impacted the consumption of the material. Southern China has observed another resurgence in covid cases which resulted in shutdowns of several rubber manufacturing units. This has further hampered the demand of Carbon Black from rubber industry.

Tire industry has also been going through off-season stagnancy which culminated in healthy inventory levels, and sluggish demand of rubber products. Original equipment tire demand has been soft owing to stagnant vehicle production in automotive industry while off-season lull has weakened replacement tire consumption.

Meanwhile, raw material coal tar prices have been consistently falling which resulted in declined cost pressure over downstream Carbon black. Market participants have been forced to keep the prices on a weaker end. Transactions have been weak owing to slowing market sentiment in China.

As per ChemAnalyst, “Carbon Black market is expected to remain weak in coming weeks owing to sluggish demand fundamentals and deteriorating cost pressure from upstream Coal tar prices. Tire industry is unlikely to improve consumption in the short term and given healthy inventory levels, consumption of rubber products is also likely to be stagnant. However, market participants can expect change in momentum in Q2 where seasonal demand push is likely to improve the market dynamics of carbon black in China.”