Europe Blacklist the Russian Carbon Black Import, Prices Show Bearish Trend

Carbon Black prices in Europe continue to bearish on a month-on-month basis as the European Parliament implements the mandate of a complete ban on Russian Carbon Black imports as supply lines in the Eurozone settle. Presently, Europe has ‘limited’ the imports of Carbon Black from Russia, and not a full blanket ban has been operating since May 2023. As Supply lines move away from Russia, prices of Carbon Black continue to fall in Europe as a situation of major oversupply is observed in the markets as a result of inventory being destocked in the global markets.

The major player in the Carbon Black in Europe is Russia, which, according to experts, supplies half of European demand and over 70% of German demand. While announcing the blacklisting of Russia, the Carbon Black Market reaction was tepid, implying Carbon Black supply lines seemed to stabilize. Though prices continue to show systematic fluctuations due to unseasonal weather patterns, the prices remain stable on a week-on-week basis. A marginal recovery in Q3 FY23 was observed in Europe as inflationary pressure reduced relatively, and a pent-up demand upsurge was observed. While major Crackers and chemical units continue to expand their capacities or are going to turnaround, demand for Carbon Black continues to remain relatively larger than other chemicals on the back of rising demand for EVs. Moreover, one market participant revealed that Governments have been reducing spending on generating demand as the European Central Bank and European Parliament are strictly advocating for a reduction in fiscal deficits to keep inflation in control, which is reflected in the car sales figure. In the month of October, Carbon Black prices fell by 5.5% in German markets, while Car sales declined by 2.5% on an M-o-M basis. Market participants in the automobile retailers revealed that demand continues to remain weak, and the European requirement for gas and heating oil, Currency depreciation, and differential European inflationary pressure are forcing major producers to reduce their purchase of Carbon Black and consumers to prioritize purchases. Europe continues to receive sufficient supply of Carbon Black from Asian markets as Asian markets. ASEAN countries significantly supply Carbon Black to European markets, and recent increments in foreign investment in Malaysian and other South East Asian countries show a strengthening economic relationship between Europe and South East Asia.

Asian Markets are responding differently as India has significantly upped their capacities while Chinese demand, not yet fully recovered, continues to stock up Carbon Black inventories, pulling up the prices in the regional market and affecting South Korean, Japanese, and Middle Eastern markets.

European importers continue to expect a chunk of their supply of Carbon Black from Russia till July 2024 and expect demand and capacity expansion in China and India to level up while they fully switch to the supply of Carbon Black towards them.