Chinese Carbon Black Industry Begins to Revive by the Promotion of the Tire Industry

Sept. 10, 2009 - PRLog -- www.shcri.com -- The carbon black industry chain includes: coal, petroleum – coke, tar, naphtha (the coking industry) – anthracene, naphthaline and other condensed-nuclei aromatics – carbon black – tire (the rubber industry) – automobile. Carbon black has the strengthening action on rubbers and they are commonly used for improving the performances of rubbers. Currently, carbon black has become the rubber compounding ingredient with the largest consumption in the world. The carbon black consumption usually accounts for 40% - 50% of the rubber consumption. In the rubber compounding, the proportion between the rubber and carbon black is usually 2:1. As China is rich in coal resources, most carbon black uses the coal tar as the raw material for production.

Analysis on the developing situation of Chinese coking industry

1. The operation status of those coking industries with the complete industry chain is slightly better. At present, the demands for cokes in the steel industry account for 85% of the total coke demands. In terms of the coke outputs, the coke outputs of integrated iron and steel enterprises remain increasing, with the YOY increase of 5.12% in 2008 and 2.84% in the first half of 2009. The coke outputs of independent coking coal enterprises remain decreasing, with the decrease of 2.84% in 2008 and 13.54% in the first half of 2009.

2. The financial crisis remains affecting the industry greatly. From January to May in 2009, the output of Chinese domestic cokes was reduced by 7.4% YOY and the export coke volume was reduced by 96.7% YOY. In the first half of 2009, the price difference between coals and cokes was about 500 RMB/ton. In 2008, the price difference was 1,000 RMB/ton. The severe decrease of the product prices had resulted in the bad overall returns of the industry.

3. The future developing trend of the coking industry was the coexistence of challenges and opportunities. In the short term, the coking industry will face serious challenges. Domestic demand hasn’t recovered completely and the international demand is even worse; as to costs, the energy saving and emission reduction pressures are being improved and the prices of cokes (raw materials) and crude oil (transportation costs) tend to increase, which will cause stresses on the coking industry. In the long term, the implementation of the national ten industry revitalization planning will increase the steel demands and promote the development of the coking industry; the implementation of Admittance Condition of Coking Industry, Revitalization Plan of the Petrochemical Industry and other policies will expand and strengthen competitive enterprises.

Analysis on the situation of Chinese carbon black industry

1. Chinese carbon black industry suffered heavy losses in 2008. The profits of Chinese carbon black enterprises were reduced by nearly 50% YOY in 2008. The main reasons were: first, the raw material prices increased sharply in the first half year while the rising rate of the carbon black prices was small, so enterprises were operated with high costs; second, the demands in the tire market were reduced greatly and the sales prices decreased severely, reducing the profits of the carbon black industry substantially.

2. Chinese carbon black industry is in the rising stage at present. Currently, 89.5% of the total outputs of Chinese domestic carbon black are used for rubber products and 67.5% of the total outputs of the rubber products are used for manufacturing tires. Since 2009, Chinese automobiles have sold well and the sales volumes surpassed America for five months. Chinese automobile market has become the global largest automobile market. The automobile sales volume of China in May was 1.102 million, rising by 31.89% YOY. Among them, the passenger vehicle sales volume was 811,000, rising by 43.7% YOY.

The recovery of the automobile industry has promoted the recovery of the tire industry. In the first half of 2009, main Chinese tire manufactures began to restore the normal production and the tire stocks were reduced obviously. The investment programs in the tire industry were restarted. In the first half of 2009, Chinese tire sales volumes remained increasing monthly and many tire enterprises were running in full capacity. The total profits of the whole industry in February, 2009, were 14.39 million RMB, decreasing by 98% YOY. The total profits of the whole industry in May, 2009, reached 3.8 billion RMB, rising by 43% YOY.

The recovery of Chinese tire industry has promoted the recovery of the carbon black industry. In the first half of 2009, Chinese carbon black price was improved from 4,200 RMB/ton at the beginning of the year to 6,100 RMB/ton in June with a growth rate of 45%. Carbon black enterprises remained high operation rates and the demands of products exceeded the supplies.

3. The future developing trend is that the carbon black industry will remain the sustainable development. The high-growth driven powers and the improvement of people’s living standards will sustainably increase the automobile demands; the policy support will promote the rapid development of the automobile industry; the development of the highway infrastructures will increase the demands for tires, rubbers and industrial rubber products. Based on these factors, it is estimated that the carbon black industry will grow rapidly.

Source: China Research and Intelligence
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The primary and secondary research was conducted by consultants in China who know the industry and the local markets well.