Carbon black industry lost more than it earned in the first half of the year

From January to February 2019, the price of raw coal tar declined sharply in the early stage, but the price of raw coal tar rose later. However, due to the Spring Festival holidays, more downstream overhauls and less purchases of carbon black, the price of carbon black did not rise, and the market price was temporarily stable. From March to June, due to the high price of raw materials, the high cost pressure of carbon black and the rising price of carbon black market, but due to the reduction of downstream demand, the price of carbon black market is severely depressed, coupled with low-price competition in the market, which limits the price increase of carbon black. In the second half of the year, due to the decrease of downstream demand and the off-season of downstream demand in July and August, the trend of carbon black falling easily and rising difficultly will continue.

In the first half of 2019, the profit of carbon black market was in a loss situation. Especially in the first quarter, a number of listed companies issued news that carbon black losses are serious, corporate profits fell more than last year.

Why the carbon black market is losing so much depends on the most important downstream tire market.

Recently, the National Bureau of Statistics released tire sales data for the first half of the year. In the first half of 2019, the sales volume of rubber tyres in China totaled 40,467.9 million, down 5.4% from 42,756,000 in the same period last year; the production and sales rate increased by 100.4% and decreased by 3.6% compared with the previous quarter; and the inventory at the end of the year decreased by 3% compared with the beginning of the year. De-stocking is an industry consensus.

In the first half of 2019, the terminal tire market started to decline compared with last year. In the first half of the year, due to the reduction of terminal car sales, combined with trade and other factors, the tire factory started to decline. Due to the decline in start-up, the demand for carbon black in tire market in the first half of the year decreased by 706,600 tons compared with last year, and the demand decreased considerably, which limited the growth of the whole carbon black market and caused serious losses.

Internationally, recently, Donghai Carbon Corporation announced that it would increase the price of carbon black in the US market due to the rising cost of raw materials. The new price will be calculated by the company based on the current situation and will be announced to the outside world in the near future. Carbon in the East China Sea indicated that the shale oil revolution in the United States had reduced the supply of carbon black raw materials and increased the production cost of carbon black. With the rising production cost of carbon black, the international carbon black giant announced a price increase. Domestic carbon black enterprises are expected to follow the global price rise, thus increasing the performance in the second half of the year.