Carbon black price increases slow down (June 5)
Market Review: This week, domestic carbon black prices remained largely stable across most regions, with only a few areas experiencing slight increases. As of Thursday, prices were: Shandong 7400 yuan/ton; Shanxi 7200 yuan/ton; Hebei 7400 yuan/ton; Guangzhou 7400 yuan/ton; and Zhejiang 7400 yuan/ton.
Raw Materials: Coal Tar Auction Prices Continue to Rise
At the beginning of the week, the high-temperature coal tar market saw a temporary consolidation and wait-and-see approach. Towards the end of the week, with the release of auction prices, the upward trend continued, although the rate of increase narrowed slightly. As the market continued to rise, and with a less optimistic outlook for the product, downstream buying sentiment gradually stabilized.
However, downstream operating rates remained high, and demand remained strong. Furthermore, there were expectations of tightening coal tar supply in some areas. Therefore, the market is expected to remain firm at high levels in the short term, with coal tar continuing to provide relatively strong cost support for carbon black.
The domestic anthracene oil market price continued its upward trend. The price of new orders for the raw material, high-temperature coal tar, continued to rise this cycle, providing significant upward support for the anthracene oil market.
Suppliers mainly continued to raise prices as a test. However, in the downstream market, the demand for high-priced anthracene oil in the anthracene oil hydrogenation market was limited, with purchases essentially halted. The main downstream market remains carbon black, but the upward momentum in new orders for carbon black is showing signs of weakening. Industry players are largely avoiding profit pressure and are adopting a strategy of pressuring anthracene oil prices.
Demand Side: Limited Changes in Factory Operating Rates, Slowing Actual Demand Growth
China's semi-steel tire operating rate is 70%. China's all-steel tire operating rate is 68%. Overall, shipments from enterprises were lackluster this period, while inventory levels increased. Most domestic tire companies have not yet implemented their monthly pricing policies, with only a few companies launching monthly price adjustment activities.
Most companies are maintaining a wait-and-see attitude. Overall, weak domestic end-user demand continues to drag down tire replacement demand. Some companies indicated that reduced export orders may further increase overall production and sales pressure, compounded by persistent raw material cost pressures. Some enterprises are expected to see a further decline in operating rates.
In summary: Weakness is evident across both upstream and downstream sectors, with a weakening outlook for carbon black
On the cost side, downstream finished coal tar products are generally weak across regions. The overall price increases for coal tar pitch and carbon black are relatively sluggish. The market shows significant resistance to high-end prices for high-temperature coal tar, putting considerable pressure on further price increases, with a further downward trend expected.
On the demand side, the tire market saw weak demand in June, with reduced purchases for immediate needs. Furthermore, after price increases, end-users are waiting for the right opportunity to enter the market, resulting in limited actual transaction volume.
Moreover, cost pressures continue to widen, and the carbon black market is operating at a loss. Further increases in raw material prices are unlikely, and with weakening cost support, the probability of a decline in new carbon black order prices continues to rise.
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