Carbon Black Market Outlook: Downward
Market Review: Following a continuous decline in tender prices for upstream raw material coal tar, costs have had a negative impact on the market. Furthermore, with new order bids falling, downstream bidders are bearish on the outlook and are taking a price-suppressing approach.
However, the carbon black market is experiencing significant losses, and further profit margins are currently limited. Negotiations are primarily being conducted at a low level, and new orders in the domestic carbon black market are relatively low.
Supply: The domestic high-temperature coal tar market is showing a downward trend. Although downstream restocking efforts after the holiday have provided some support, with prices even seeing slight increases in some regions, the coal tar market has recently resumed its downward trend.
This is primarily due to an increase in negative market factors. First, new order auction prices for downstream deep-processing products have fallen across the board, with carbon black prices continuing to decline after the holiday.
Second, the unsuccessful auction of Anhui Linhuan Coking Plant has dampened downstream demand. Coupled with the resurgence of tariff policies, downstream demand is generally negative. In the short term, the coal tar market is more likely to fall than rise, and carbon black cost support remains relatively weak.
Downstream Demand: For semi-steel tires, all-season tire market activity declined compared to last week, with reduced channel restocking and flat sales at retail outlets. Transaction prices remained largely stable. Demand for snow tires increased. With lower temperatures in Northeast China and the arrival of the first snow in Heilongjiang, demand for snow tires increased, sales at retail outlets surged, and expectations for channel restocking intensified.
For full-steel tires, replacement market demand was sluggish. Although some tire manufacturers have implemented price increases, market sentiment remains subdued. To maintain channel customer stability, market trading remained focused on prior prices.
Operational Capacity and Profits: Carbon black plant operating rates declined. After the holiday, some plants in Shandong underwent maintenance, while a major plant resumed operations after maintenance. Plants in Hebei also underwent maintenance, while plants in other regions maintained reduced capacity. In Shandong, for example, tender prices for raw coal tar declined, along with new order prices for carbon black. Theoretically, the carbon black market's profit margins remain largely negative.
Overall, with the decline in new tender orders for raw coal tar, expectations are rising that supply will pull the carbon black market higher. Some companies have recently undergone maintenance, but this has had little impact on market supply. Finished carbon black inventories remain high, and some new orders have been quoted lower to capture downstream market share.
However, downstream players are bearish on the outlook, and orders are primarily based on demand. The market for raw material coal tar remains expected to remain weak, making it difficult for costs to drive the market. Furthermore, low-priced orders placed in the downstream market continue to suppress prices, and demand is lacking any support. Overall, the carbon black market may continue to decline.
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