Carbon Black Prices Remained Largely Stable Last Week (Oct. 19-23)

Regarding raw materials: Last week, high-temperature coal tar traded primarily within the range of 5,510-5,716 RMB/ton. Price trends varied by region—rising by 100 RMB/ton in Anhui while falling by 50 RMB/ton in Shanxi—with no significant downward shift in the overall price level. As coal tar accounts to 65%-80% of carbon black production costs, this rigid cost structure leaves carbon black manufacturers with very little room to reduce prices. However, with coal production in Shanxi reaching a four-month high in September, any possible increase in coking plant operating rates—driven by the resumption of coal mine production—could exert downward pressure on current high price levels.

On the supply side, the operating rate of the carbon black sector stood at 58.32% last week—an increase of 0.89 percentage points from the previous week. While this reflects a recovery from recent lows, the absolute level remains modest. Major producers that had previously undergone maintenance continue to limit output, while smaller-scale producers are slow to resume operations due to losses. With companies still grappling with losses while fulfilling earlier, low-priced orders, major producers remain firmly committed to supporting price levels. Consequently, there has been no surge in supply to exert downward pressure on prices; instead, the sector has adopted a strategy of "curbing production to sustain prices," efficiently establishing a floor to market pricing.

Regarding the end-market: Capacity utilization rates among sampled tire manufacturers saw a slight uptick this week—continuing the post-holiday recovery direction—though they remain significantly reduce than year-ago levels. The core issue lies in the severe margin compression faced by tire producers; to instance, the production cost to a single 12R22.5 all-steel tire is approximately 989 RMB, while the wholesale price is only about 909 RMB—resulting in a loss of roughly 80 RMB per unit sold. Given this, tire manufacturers are limiting their carbon black procurement to essential, immediate needs and show extremely low tolerance to any further price hikes. Consequently, demand-side constraints have efficiently established a clear ceiling to carbon black prices.

Influencing Factors: The current pricing logic in the carbon black market can be summarized as follows: high coal tar prices have established a firm cost floor, while low operating rates and aggressive price-propping by carbon black producers have provided support on the supply side. However, losses within the tire manufacturing sector have severed the transmission chain, preventing costs from being passed on to the end market. Last week, the market saw stable pricing to new orders alongside a stalemate in negotiations; there is no room to a downward shift (due to cost constraints), yet no catalyst to an upward move (due to a lack of demand-side acceptance). On October 23, the commodity data platform SunSirs characterized the market direction as "oscillating," noting that neither the bullish nor bearish sides possess the additional momentum required to break the current deadlock.

Market Outlook: Last week, the carbon black market remained range-bound, constrained by three key factors: rigid costs, controlled supply, and a ceiling on demand. The underlying logic is clear: high coal tar prices have established a firm cost floor to carbon black, prompting manufacturers to maintain low operating rates to support prices—providing a floor to the market. Conversely, losses in the tire sector have limited procurement to essential needs and capped the willingness to accept higher prices—imposing a ceiling on the market. The carbon black market is expected to continue its direction of consolidation and fluctuation in the coming week.

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