Europe's carbon black prices soar, tire makers take another approach

Carbon black prices soar in Europe, tire manufacturers turn to recycling carbon black

With the high volatility of crude oil and naphtha prices in July, coupled with the recovery of demand in the European tire market and challenges to the supply chain, European carbon black prices rose sharply in July. It is reported that the carbon black delivery price at the Port of Hamburg in July once surged to around US$1550 per ton. Faced with high costs, many tire and rubber product manufacturers have begun to consider using recycled carbon black (rCB) as an alternative, a phenomenon that has attracted deep concern from tire suppliers and other partners. It is worth mentioning that Continental Tire Company has also recently made a commitment to purchase recycled carbon black for mass production of tires.

It is understood that Continental and Pyrum Innovations have jointly announced that they have signed a long-term purchase agreement aimed at applying recycled carbon black to the mass production of future passenger car tires. In Continental's passenger car tire manufacturing, carbon black used accounts for 15%-20% of the total tire, and the specific proportion varies depending on the tire model.

Turbulence in the Red Sea and trade tensions push up carbon black prices

Since the beginning of 2024, carbon black prices in Europe have continued to be high. This is mainly due to the turmoil in the Red Sea region, which has led to increasingly tense trade relations between Asia and Europe. The crisis in the Suez Canal has further exacerbated the pressure on the supply chain, and the shortage of shipping capacity in the Indian Ocean has made Europe's supply situation worse.

In response to the implementation of the Russian ban, many European importers have increased imports from countries in the Asia-Pacific region such as South Korea and India. In addition, affected by the suspension of the U.S. Gulf of Mexico route, shipping companies began to shift their focus to the Indian Ocean. India's main export inventory is now in place and an adjusted offer has been made for goods destined for Europe. Notably, the spot price of Durgabur N220 carbon black quickly climbed from US$1435 per ton to US$1485 per ton in the last two weeks of July. At the same time, with the growth of German automobile production in June, the demand forecasts and operating guidance of upstream tire manufacturers have also increased accordingly. Hubtrac raised its third-quarter tire sales forecast last month, which in turn pushed carbon black delivery prices in the Port of Hamburg to soar to US$1550 per ton at the end of July, a sharp increase of 50% from January.

The market for recycled carbon black has broad prospects, but the cost issue still needs to be resolved

In fact, recycled carbon black is becoming increasingly popular in the market. According to Mr. Weibold, head of the Austrian consulting firm Robert Weibold GmbH, the annual output of recycled carbon black is expected to exceed the 500,000 tons mark in the next three to five years. He further emphasized that with the rapid growth of market demand, the price of granulated and recycled carbon black has gradually gotten rid of its dependence on primary carbon black and formed an independent value system. Europe's goal is to increase annual processing capacity to 672,000 tons in the next few years, with a view to capturing 11% of the global market. However, a European market source pointed out that although recycled carbon black has significant price discounts, its cost is still unable to compete with the original carbon black due to high-carbon costs (currently carbon costs are about 68 euros per ton) and energy consumption in the recycling process.