Cost shift drives carbon black prices up sharply
Market Review: Carbon black prices remained stable for most of the week, but rebounded strongly towards the end of the week driven by costs. Regional prices at the end of the week were as follows: Shandong 7650 yuan/ton; Shanxi 7500 yuan/ton; Hebei 7700 yuan/ton; Guangzhou 7700 yuan/ton; Zhejiang 7650 yuan/ton.
Raw Materials: Coal Tar Enters Rebound Phase
High-Temperature Coal Tar: Since last week, domestic coal tar sales sentiment has improved. With new auction prices being released and auction prices in Shanxi continuing to rise, the overall coal tar market price has shown an improvement. From the supply side, due to the continuous rise in coal prices in producing areas, the cost center of coking furnaces has been constantly shifting upward. Coking plants are operating less actively due to cost pressures, leading to a reduction in the supply of high-temperature coal tar. Currently, downstream operating rates remain high, and demand remains strong, especially in Shanxi where the supply-demand tension is prominent. In the short term, the coal tar market will continue its upward trend, but the extent of further increases at high levels will be limited.
Anthracene oil: This week, new orders for high-temperature coal tar, a raw material, were gradually released, showing a continuous upward trend. This provided ongoing cost support for anthracene oil holders. While the recent slight increase in anthracene oil supply has been insufficient to offset the upward pressure from holders influenced by raw material prices, current market sentiment is strongly inclined to raise prices. However, downstream carbon black producers have limited capacity to accept high prices, and manufacturers are cautiously testing end-user demand. The carbon black market is currently in a stalemate, with no purchases. Overall, the anthracene oil market is strongly supported by costs, and there is significant room for price increases in actual transactions.
Demand side: Actual demand is limited, and the increase in operating rates is moderate
China's semi-steel tire operating rate is 65%. China's all-steel tire operating rate is 64%. Tire operating rates improved slightly this week compared to the previous week. Companies that underwent long maintenance shutdowns at the beginning of the week have resumed operations as planned, and production is gradually recovering. However, considering the current raw material and order situation, most companies are maintaining their previous production control measures.
However, the end of this week coincides with the beginning of July, and a small number of companies in Dongying and Weifang have maintenance schedules, including semi-steel and all-steel tire manufacturers, mostly for 3-5 days, with some maintenance periods being longer. This will, to some extent, delay tire product supply at the beginning of the month.
In summary: A clash of bullish and bearish news leaves the market uncertain
From the supply side, the tight coal supply situation continues to ease, coupled with the previous good profit recovery, resulting in sufficient industry operating resilience. Overall supply will remain high. There are expectations of rising high-temperature coal tar supply, but price support is limited, and overall upward potential is insufficient.
With the continued rise in carbon black prices, downstream companies are facing significant procurement cost pressures, and end-user rubber and tire factories are experiencing profit pressures, leading to weak follow-up purchases.
Overall, with mixed bullish and bearish news on both the supply and demand sides, the continued rise in carbon black prices faces significant resistance, and the market is likely to remain in a wait-and-see mode with prices held steady.
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