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Carbon Black Price Hike to be Transmitted to Tire Prices Soon

The prices of carbon black in domestic market have increased across the board, the growths range from 500 yuan/ton to 1,000 yuan/ton, with the highest growth rate at 20%.

The collective price hike was the second time within this year, boosting by low inventory and rising costs.

While the rubber prices were fluctuant, prices of carbon black went all the way up. Affected by the two major raw materials, the prospect of tire price in the coming days seems unpredictable.

Some believe that growing carbon black prices may soon be transmitted to tire and rubber products.

Changes in rubber prices at the beginning of this year entailed domestic tire producers' expectation for tire price lifting. However, the actual tire price growth failed to meet market expectation.

Over the past few years, restrained by overcapacity and lower demand in the downstream, the market stayed sluggish. The prices dropped nearly 30% from 2013, some capacity quitted the market in succession.

The price of carbon black N330 dropped from 6,600 yuan/ton in 2013 to around 4,500 yuan/ton at present, down by nearly 30%, and the entire industry was loss making.

After rapid expansion in the previous years, China's carbon black capacity grew slower, and the growth in 2015 was only 80,000 tonnes. An industry insider predicted that the growth in 2016 might be around 230,000 tonnes.

The latest statistics show that the quotations for N220 in Shandong province range from 4,800 yuan/tone to 5,400 yuan/ton; those in Hebei province are from 4,800 yuan/tone to 5,200 yuan/ton; and those in Shanxi province range from 4,600 yuan/ton to 4,800 yuan/ton.

For N330 carbon black, the quotations in Shandong range from 4,400 yuan/tone to 4,800 yuan/ton; Hebei, 4,300 yuan/tone to 4,700 yuan/ton; and in Shanxi,  3,900 yuan/ton to 4,500 yuan/ton.

Carbon black is the major raw material of tire and 67.5% of carbon black are used to produce tire rubber.

China is the world's largest carbon black producer with an overall capacity approaching 7 million tonnes annually, accounting for 42% of the world's total.