Decline Pauses: Carbon Black Enters a Wait-and-See Period(Oct 10)

Decline Pauses: Carbon Black Enters a Wait-and-See Period

Market Review

Since late August, supported by the cost side, carbon black entered a rapid upward trend, with its peak once reaching the highest level in nearly three years. However, the sustained upward trend lasted only about half a month. Entering mid-September, carbon black began a sharp reversal, entering a rapid decline. By the end of the National Day holiday, the downward trend had slowed, and a silent wait-and-see atmosphere prevailed.

Raw Material Side: High-Temperature Coal Tar May Have Upward Support

Since mid-August, high-temperature coal tar has risen significantly, and the core driver of this round of coal tar market increase remains the continued fermentation of the tight supply-demand pattern. On the supply side, earlier sharp reductions in coking enterprise operating rates led to a noticeable contraction in coal tar output, further tightening an already undersupplied market and driving prices higher, with recent shortages becoming increasingly prominent. On the demand side, as the market previously held certain correction expectations, downstream plants generally kept raw material inventories low, and restocking demand was released in a concentrated manner, continuously intensifying the tight supply situation.

As coal tar prices continued to be pushed to high levels, carbon black enterprises' losses deepened, triggering production reduction expectations and escalating negative feedback risks. A coal tar inflection point emerged. From the carbon black perspective, bearish signals from the cost side had appeared, and the market began to rapidly enter a declining state.

Returning after the holiday, the domestic high-temperature coal tar market saw bullish and bearish forces in a tug-of-war. If downstream product expectations perform well, it could also push the raw material coal tar market into a modest rebound channel.

Demand Side: Downstream Price Transmission Impeded, Operating Rates Constrained

During the National Day holiday, most sample enterprises entered shutdown maintenance status, with operating rates falling to seasonally low levels. After the holiday, some enterprises gradually resumed operations, but certain tire enterprises delayed restart for various reasons, and the tire industry operating rate remains at low levels. Meanwhile, a few large enterprises maintained normal operations to ensure routine product supply. With raw material prices continuing to rise, cost-side pressure is significant, but resistance to price increases exists at various distributor channel levels, and price transmission from raw materials to downstream products remains impeded.

Overall: Cost Floor Support, Demand Ceiling Pressure

The carbon black market is currently in a stalemate phase of "cost floor support, demand ceiling pressure." New contract offers are in a wait-and-see consolidation state, actual transaction volumes are modest, downstream buyers show low enthusiasm for taking delivery, with clear resistance to high prices, and market trading sentiment is subdued. However, as raw material market prices show a rebound trend going forward, cost-side pressure will gradually increase, the decline in carbon black new contracts will gradually stop, and bottom support will strengthen. But demand-side suppression persists, with insufficient downstream procurement follow-through, and upside room is relatively limited. With bullish and bearish forces counterbalancing each other, the carbon black market is entering a situation where both upward and downward movements are difficult in the short term.

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