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Carbon Black Prices End Q1 on Bullish Note as Crude oil prices Escalate
Carbon Black Prices End Q1 on Bullish Note as Crude oil prices Escalate

Carbon Black Prices End Q1 on Bullish Note as Crude oil prices Escalate

  • 19-Apr-2024 3:10 PM
  • Journalist: S. Jayavikraman

Hamburg (Germany): Carbon Black N220 prices surged by 9% in the final two weeks of March 2024 as crude prices continued to rise. Market reports attribute this increase to raw material shortages, improving demand in European nations, and gradual reductions in supply from Russian suppliers to the Eurozone. At the beginning of Q2 FY24-25, suppliers are maintaining prices, and sentiment regarding demand in the Eurozone, particularly for Carbon Black in tire markets, is positive, indicating a recovery.

Brent prices rose to USD 89/b by the end of March, an 8% increase, driven by extended supply cuts from OPEC+ and Russia into the next quarter. This upward trend in spot and contract markets is also affecting prices for newer petrochemical contracts, including Carbon Black.

In Europe, Cabot and Orion are two major domestic suppliers of Carbon Black, providing both specialty and performance Carbons. However, the primary supply of N220 hard grade Carbon Black comes from Russia, with subsequent distribution through Hungary and other Eastern European suppliers. ChemAnalyst assesses the Russian supply price of N220 to Germany for the week ending April 5th at around USD 1410/MT on a FD basis. Russian suppliers have been able to command strong premiums over their sales due to significant increases in spot prices, particularly with intensified Ukrainian drone attacks on refineries in previous quarters.

Currently, contract prices for Carbon Black supply are 8% lower than spot prices in early April, with the differential expected to narrow as supply lines stabilize. Analysts anticipate lower demand for the next quarter compared to Q1 FY24-25. Russian suppliers are fulfilling their delivery promises for Carbon Black N220 grade by importing raw materials from Belarus to maintain their schedules.

With refinery repairs progressing and crude prices rising, contract negotiations for the next quarter favor Russian suppliers significantly. Contract prices may see an upward revision of 8-10%, primarily due to lower sales volume and partially to cover the costs incurred from importing from Belarus in the previous quarter.

Domestic Eurozone supply currently prices N220 grade higher, with Belgian and German suppliers offering it at USD 1700/MT to USD 2000/MT to the Eurozone, although these prices are significantly reduced compared to FY23/24 contract prices. The current product mix in European markets favors Russian Carbon Black, especially in tire markets, which are also facing high SBR prices, primarily from Middle Eastern and American feedstock supplies in contract volumes.

ChemAnalyst continues to monitor the pricing movements of Carbon Black N220 grade across European markets and forecasts a bullish trend to persist in April 2024, supported by strong demand sentiment and pending orders, with adequate container and tanker availability in the North Sea.

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