Masterbatch Prices Plunge in China Amidst Rising Inventories

Masterbatch's production cost tends to decrease, and low labor costs and a growing workforce give the Chinese market the edge. There is more stockpiling of the product as consumption decreases, as noted by the traders and the suppliers within the regional market.

The market value of Masterbatch plunged in the Chinese market during the third week of January 2023, with prices hovering at USD 1195/tonne FOB Tianjin (40% Carbon Black) as per the sources collected by the ChemAnalyst Research Team Data. The Masterbatch market has weakened by the declining demand from the downstream agricultural and construction sectors in the Chinese market. The inventories of Masterbatch were observed to be increasing with the traders and the suppliers.

China's export-driven economy is set to get poorly impacted by the slowdown in global trade. The global economy is suffering from high inflation and country-specific central banks' control measures due to both sides' restrictions on energy supply, intentionally or unintentionally. The demand for Masterbatch from the construction sector remained weakened by the third week of January, continuing throughout the first week of the month. Masterbatch's other major downstream sectors, such as aviation and automotive, have been lurching for growth in the new year as soaring crude oil and natural gas prices have dented new investments in these sectors.

Demand-wise, there was a weak demand for Masterbatch from downstream tyre manufacturers to begin development, and there was fierce opposition to plummeting feedstock Carbon Black. The Masterbatch market generally has a low-trade climate, with items mainly purchased on demand. This month, the domestic Carbon Black market showed a falling trend. The cost of unprocessed coal tar kept fluctuating, affecting the prices of Carbon Black as well. The price of Carbon Black fell due to a consolidating operation, and cost-side support for Masterbatch firms was weak. On the cost front, the market of coal tar supply remained unstable. The majority of Carbon Black and deep processing businesses are losing money. Construction start-ups by Carbon Black enterprises are currently not extremely motivated, and the overall start-up load has decreased dramatically.