US Carbon Black Prices Likely to Stay Bullish Despite Soft Economic Recovery Prediction

Despite expectations of sluggish economic growth in the upcoming months by significant market players, Carbon Black prices in the United States are maintaining an upward trajectory till the third week of November 2023. The Carbon Black prices in Europe continue to stay bearish, while Asian markets show signs of stabilization after a brief bullish trend. US markets continue to tread an independent path despite being the largest market for Carbon Black.

In US markets, Carbon Black N220 grade, largely traded for the production of EV batteries, continues to stay above USD 2000/MT compared to other regions where the same grade is priced just between USD 1500-1600/MT FOB basis. In the previous month, auto union strikes subdued demand sentiments across the EV battery sector, with major players like Ford General Motors cutting production in the domestic territory and outsourcing orders to Mexico subsidiaries, etc. Prices showed a sharp fall and stabilized around USD 2000/MT for the entire month of October 2023. A gradual price rise began in the first week of November when Ford reached an agreement with UAW and submitted to their demands. The Carbon Black market turned bullish on the back of downstream pent-up demand for pending orders in the downstream automobile sector. In the meantime, prices of ethylene and other co-products dipped due to weak polyethylene markets as construction and retail remain subdued and China pumping large volumes into the global market, pulling the prices down. Political and tariff regimes continue to support domestic volumes over imports in the USA. Birla Carbon, a major Carbon Black producer, is expanding its portfolio for battery volumes in the USA and has undertaken to raise $1.5 billion to fund the expansion.

The European Carbon Black market remains bearish as the EU continues to restrict Carbon Black imports from Russia. In contrast, market players continue to reveal that ‘shadow tankers’ continue to provide significant Carbon Black volumes to Europe at discounted rates and keep the rates down. While analysis of Russian ESPO and SOKOL prices remain largely strong and above the sanctions price of USD 60/barrel, Carbon Black prices have fallen to USD 850/MT for N220 hard grade FOB basis. Russian producers have been reducing the supply of petrochemicals like Carbon Black to pull up their prices and improve refining margins over chemical margins in the current quarter FY23. With the extension of crude oil cut till December 2023, Russian crude oil prices are expected to soar further. Asian markets turned bearish in November after weak US economic performance and slower Chinese recovery sentiments.

ChemAnalyst expects Carbon Black prices to stabilize and turn bearish in December as colder temperatures hit North American regions and pull down the prices. Post-Christmas restocking is expected in January 2024 onwards.