Carbon Black Market Analysis: Price Surge in Europe, Supply Challenges in North America

　　In the third quarter, the carbon black market in Europe and North America has seen marked volatility. As over 70% of carbon black production costs are tied to feedstock oil, international oil prices play a key role in influencing market prices. Nonetheless, other factors such as supply and demand balance, geopolitical conditions, consumer trends, market needs, competitive landscape, product strategies, distribution channels, and macroeconomic trends also exert varying degrees of influence on the carbon black market. Below is an analysis of recent factors affecting the carbon black market in Europe and North America:

　　Europe's Carbon Black Prices Reach Record Levels, Recycled Carbon Black Gains Popularity

　　Rising crude oil and naphtha prices, along with supply challenges in the European tire industry and recovering demand, caused carbon black prices to spike in July. N220 carbon black delivery prices in Hamburg soared to around $1,550 per ton. This price surge has raised concerns among tire and rubber goods manufacturers, prompting a shift towards recycled carbon black (rCB). For instance, Continental Tires in Germany has pledged to purchase recycled carbon black for use in bicycle tires.

　　Since early this year, European carbon black prices have remained high, partly due to ongoing shipping disruptions in the Red Sea, straining trade between Asia and Europe. The situation worsened with Russia’s invasion of Ukraine, prompting the EU to sanction carbon black and styrene-butadiene rubber imports from Russia, with a full ban taking effect from July 1. Although Russian carbon black is still relatively affordable, it has been rerouted through Hungary and Poland into the European market. Meanwhile, European importers have also ramped up imports from Asia-Pacific nations, particularly South Korea and India.

　　The Suez Canal crisis and shortages of shipping fleets in the Indian Ocean have compounded supply issues. In June, Germany’s rising car sales gave upstream tire manufacturers reason to increase demand forecasts. As a result, by the end of July, N220 carbon black prices at Hamburg Port had skyrocketed by 50% from January levels. Asian shipments, meanwhile, have stayed consistent, though delayed by port backlogs. Lower expectations from the electric vehicle market in Europe led to price corrections in the Asia-Pacific region.

　　In response, Continental Group has signed a long-term supply agreement with tire pyrolysis company Pyrum to secure lower-cost carbon black supplies via rCB. However, according to Chem Analyst, rCB’s costs remain higher than traditional virgin carbon black (vCB) due to the high price of used tires (about €68 per ton) and the energy-intensive recycling process. New capacities from companies like Orion and Continental Tires are expected to be operational by 2025, while the EU continues negotiations with Russia regarding carbon black supply.

　　U.S. Carbon Black Market Experiences Price Hikes Amid Uncertainty

　　By August 2024, N220 carbon black prices had increased by 5%. In the first week of August, prices were volatile due to increased trade in Texas, spurred by Hurricane Beryl, Canadian labor strikes, and heightened summer consumption that saw several petrochemical plants resume operations. Recent market analysis indicates that carbon black imports from Canada to the U.S. have risen in price. Late July and early August saw promising sales forecasts for original equipment tires, driven by seasonal discounts. Meanwhile, N220 carbon black supply remained steady.

　　In July, U.S. auto sales reached approximately 1.34 million units, reflecting a modest 2.8% year-on-year increase. Although consumer spending was cautious in prior months due to a sluggish labor market, August saw improvements, fueling increased demand for carbon black.

　　In mid-August, Canadian and Indian carbon black prices remained high, with freight costs further widening the gap between overseas supply and spot prices. U.S. domestic production remained stable, but reduced supply from Canada, impacted by labor strikes, led to strategic stockpiling by domestic traders to drive up prices. By mid-August, U.S. market prices softened slightly as traders offered discounts. With the WTI index trending lower, demand slowed, and purchasing activities followed suit.

　　By late August, N220 carbon black prices were still rising. As freight costs remain elevated and overseas supply lags behind demand, further price increases are anticipated in September. With winter stockpiling starting and Canadian railway labor talks ongoing, U.S. traders are expected to continue stockpiling, keeping prices on the rise.