Tire Demand Sluggish Carbon Black
[Introduction] The domestic carbon black market was characterized by a strong wait-and-see attitude among market participants this week. Coal tar prices were released at the end of the week, with both increases and decreases in new order prices, but the magnitude was limited and had insufficient impact on the market. The wait-and-see atmosphere prevailed, with downstream inquiries and offers for new orders remaining low. New order negotiations continued to break through low levels, resulting in a stalemate in new order negotiations. The carbon black market continued to operate at a loss, and most of the market remained in a consolidation phase at low levels.
Market Review: Looking at the trend of the carbon black market in recent years, prices in 2025 were at a near three-year low. The carbon black market began its downward trend at the end of the first quarter of 2025, and remained in a downward channel for most of the year, falling to its lowest point in nearly three years. However, recent market conditions suggest a turnaround, with expectations of rising coal tar prices, potentially providing support from the cost side.
However, new orders in the downstream tire market are basically completed, with only small-scale restocking demand remaining. After new orders pushed up prices, downstream acceptance was relatively limited. Therefore, the price increases by some large manufacturers were mainly aimed at boosting market activity, with few actual transactions. In the short term, the market has limited room for price support and will likely remain range-bound.
On the cost side: Since the mid-week price announcements, most regions have continued to decline, but the rate of decline has narrowed significantly, releasing some bottoming signals. With this signal, downstream buying sentiment has clearly rebounded, and some traders who previously feared further price drops have shown increased willingness to enter the market. Towards the end of the week, the auction atmosphere continued to rise significantly, and the number of new orders with rebounding prices continued to increase. The coal tar market is temporarily strong in the short term, but the extent of the price increase still needs to be observed in relation to downstream product price increases.
On the demand side: The operating rate of semi-steel tires in China is 73%. The operating rate of all-steel tires in China is 65%. Last week, maintenance shutdowns at some companies resumed normal production levels, leading to a slight increase in the overall operating rate. Most other companies' plants are operating stably. During the period, sales were mainly driven by routine transactions, with overall inventory fluctuating slightly.
In summary: Auction prices for raw material coal tar were gradually released, and coal tar prices showed signs of stabilizing. However, weak end-user demand offered little support to the raw material market. Cost support for carbon black was relatively limited, and the tire market's bearish outlook and low willingness to purchase further limited the potential for a market rebound, resulting in a generally weak consolidation.
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