The Industry Holds Divergent Views on the Global Carbon Black Market Trends for the Second Half of the Year

According to European Rubber Journal, the outlook for the global carbon black market in the coming months is widely varied. In recent weeks, industry professionals have sent mixed signals about the carbon black industry, particularly in terms of pricing and future supply-demand balance.

The First-Half Performance of the Three Major Carbon Black Suppliers

The half-year performance reports of the three major carbon black suppliers consistently reflect the same theme: although sales revenue has remained steady or decreased compared to the same period last year, earnings and profits continue to grow.

East China Carbon Corporation is a typical representative of this trend, as its rubber carbon black business unit saw sales volume unchanged from the previous year while sales revenue increased by 15% and operating profit doubled. East China Carbon attributed the increase in sales revenue and operating profit to improved productivity and the transfer of environmental investment costs, especially in North America.

Similarly, Cabot Corporation's reinforcement materials division reported that although its sales revenue for the third quarter (i.e. the second quarter of the calendar year) decreased by 14.5% and sales volume decreased by 8%, profits increased by 17%. According to Cabot, this is mainly due to the decline in sales volume of rubbercarbon blackin the replacement tire market; the largest decline in sales volume was seen in Europe, the Middle East, and Africa, at 12%, followed by a 10% decrease in the Americas and a 5% decrease in Asia.

Orion Engineered Carbons, following the same pattern, saw a significant increase in profit in its rubber carbon black business, primarily as a result of higher contract prices. However, in the three months ending June 30, Orion's sales revenue for rubber carbon black decreased by 14%, and sales volume decreased by over 9%. The company's performance report pointed out that the decline in sales volume was mainly due to "destocking and destocking delays" by customers in Europe, the Middle East, Africa, and the Americas.

Outlook for the Carbon Black Market and Different Perspectives

Although the outlook for market demand remains weak, at least these three major carbon black suppliers remain optimistic about profitability and pricing prospects for the remaining time this year. Cabot is one of the companies holding this optimistic view and expects that contract prices for carbon black will increase by 2024 in the European and American markets if the fundamentals remain "unchanged".

Sean Keohane, President and CEO of Cabot, told market analysts, "We have a certain proportion of customers who have signed multi-year business contracts because they perceive that prices will rise in the second year." Keohane added in a financial report conference call on August 5, "These price increases are the basis for pricing the remaining contracts in 2024 and should reflect the actual level of price increase." However, there is one factor of uncertainty, which is the impact of new EU sanctions on Russian exports ofcarbon blackto Europe in June 2024. Regarding this, Keohane commented, "Supply conditions are very important for customers, and I think the reliability of supply is crucial to them."

However, on the other side of the negotiating table, some individuals express a different view regarding the future trends of the carbon black market in the coming months. In numerous anonymous feedback provided by the "European Rubber Journal," one individual commented, "The global market is on a downturn, and there won't be a recovery in 2024. So, let's remain vigilant and not unnecessarily panic about the supply situation."

As for the potential impact of the new sanctions imposed by the European Union on Russia, another perspective suggests, "All major distributors of Russian carbon black have warehouses filled with inventory within the European borders, sufficient to meet the demand in 2024 and 2025."

Yet, others believe that "external supplies of carbon black are more than capable of meeting the market demand in Europe," especially as overseas producers are currently expanding their production capacities. Additionally, the "current global shipping costs are low, making carbon black imports very attractive.