Overview of China’s carbon black industry in 2022: The automotive industry is driving up the demand and average price of carbon black

1. Industrial chain: Automobile production stops falling and rises, driving the demand for carbon black

Carbon black is a kind of amorphous carbon, also known as carbon black. Black carbon is the product of incomplete combustion or decomposition of carbon containing substances under the condition of insufficient air. At the beginning of the discovery of carbon black, it was mainly used as a black dye. With the progress of The Times, people gradually found other uses for carbon black. Today, the most common use for carbon black, besides dyeing, is as a reinforcing agent for rubber. According to the different uses of carbon black can be divided into rubber carbon black and non-rubber carbon black, rubber carbon black is mainly used in the production of tires, non-rubber carbon black can be used in pigments, plastics, conductive materials and other products.

Carbon black is the product of incomplete combustion of hydrocarbons, which requires raw oil with higher aromatics content and less asphaltene and impurities. At present, the raw oil of our country mainly includes petroleum oil and coal tar oil. The oil in petroleum series is mainly ethylene tar, because other petroleum series residual oil has low aromatics content, which is not suitable for the production of carbon black. Coal tar series oil includes coal tar and anthracene oil, which are ideal raw materials for carbon black oil. All of these are byproducts of coal or oil. 

China has abundant raw coal production, which has increased year by year from 2017 to 2021. From January to November 2022, China’s raw magnesium production reached 4.094 billion tons, an increase of about 420 million tons compared with the same period of last year. After a slight decline in 2018, China’s crude oil production also showed a gradual increase. In the first 11 months of 2022, China’s crude oil production reached 187.775 million tons, an increase of 5.291 million tons over the same period last year. Abundant raw coal and crude oil production guarantee sufficient raw materials for carbon black production and ensure its stable supply.

From 2018 to 2020, affected by the global financial crisis and compounded by the epidemic, China’s automobile market was cold, and its automobile output dropped for three consecutive years, to 25.324,900 units in 2020. In 2021, the country’s economic vitality gradually recovered, automobile production rose to 26.257 million units, and continued to rise in 2022. From January to November, China’s automobile production reached 25..2 million units, an increase of 1.358 million units compared with the same period of the previous year. With the support of policies, the output of new energy vehicles in China continues to rise, from 794,000 in 2017 to 3.545 million in 2021. In 2022, the output of new energy vehicles in China further increased to 6.253 million, with a fast growth rate. 

Output of our country automobile stops falling and picks up, which pulls the demand of upstream industries rising. Carbon black as an important automobile parts tire main raw material, its demand will also increase with the increase of automobile production.

2. Industrial situation: Our country is a large country with carbon black production, with an obvious trend of average price rising 

Our country is one of the earliest countries that produced carbon black in the world. In ancient times, people found that animal and plant oil, pine branches after the burning of fire smoke condensed into black ash can be used to mix ink and black pigment, this is the earliest carbon black. With the change of time, people’s understanding of carbon black gradually increased, its preparation methods and uses are gradually enriched. China is the world’s largest producer of black carbon, producing nearly half of the world’s black carbon in 2021. In addition, the U.S. produces about 10% of the world’s black carbon, second only to China.

From 2016 to 2021, China’s carbon black production capacity has increased year by year, from 7.01 million tons in 2016 to 8.2 million tons in 2021, and is expected to continue to increase to 8.51 million tons in 2022. From 2016 to 2019, the country’s black carbon production maintained steady growth, and in 2019, the country’s black carbon production increased to 5.75 million tons. In 2020, due to the impact of the COVID-19 pandemic, the operation rate decreased, and the overall economic environment was damaged and the market demand decreased, leading to a significant decline in the output of carbon black to 4.82 million tons. In 2021, the country’s black carbon production rebounded to 5.2 million tons, and is expected to be the same in 2022 as in 2021.

Carbon black production capacity is mainly distributed in East China and North China, accounting for 45% and 40%, respectively. The main raw materials of carbon black production are by-products of petroleum and coal chemical industry. The location of carbon black enterprises close to the source of raw materials can effectively reduce the transportation cost of raw materials. Therefore, most of the carbon black industry chooses to carry out industrial layout close to the source of raw materials, and the carbon black production capacity is mainly located in large energy and chemical provinces in North and East China. At present, our country’s black carbon production capacity accounts for a large number of enterprises is black cat shares, production capacity accounting for 14%. 

Black Cat Shares is the first carbon black production enterprise to complete the national capacity layout in China. By the end of 2021, Black Cat Shares has established eight production bases in Jingdezhen, Jiangxi, Chaoyang, Liaoning, Hancheng, Shaanxi, Wuhai, Inner Mongolia, Handan and Tangshan, Hebei, Taiyuan, Shanxi and Jining, Shandong, with strong supply capacity. 

3. Import and export trade: The demand of carbon black export is large, mainly in Asia 

Our country produces the most carbon in the world, and it is also a large exporter of it. In 2021, China exported 446,300 tons of carbon black, while imported less than 10,000 tons in the same year. After 2018, the export volume of carbon black dropped from 464,300 tons in 2018 to 443,500 tons in 2020, a decrease of nearly 20,000 tons. However, the export amount of carbon black showed an overall upward trend, rising from 594 million yuan in 2018 to 663 million yuan in 2020, mainly due to the gradual increase of the average export price of carbon black, which increased from about 12,000 yuan per ton in 2018 to about 14,000 yuan per ton in 2020. In 2022, the average export price of carbon black continued to rise. From January to November, the export volume of carbon black was 378,600 tons, the export amount reached 812 million yuan, and the average export price rose to more than 20,000 yuan per ton.

4. Development trend: The demand for carbon black is increasing, and the scale of the industry is improving 

1) The steady recovery of the domestic economy may increase the demand for carbon black

 In December 2022, China’s epidemic prevention and control policy will be gradually lifted, which may accelerate the recovery of the Chinese economy, and lead to a rapid rise in consumer demand for automobiles, consumer durables, electronic products and other industries, thus driving up the demand of related industries in the upstream. Carbon black as an important raw material for tires, the increase of automobile market demand, will drive up the demand for tire carbon black. In addition, consumer durables, electronic products and other increased demand, will also pull plastic carbon black, conductive carbon black demand increase. 

2) The national environmental protection policy is becoming stricter, accelerating the optimization of carbon black enterprises 

The production of carbon black requires insufficient combustion of fuel oil and high energy consumption. In addition, the exhaust emissions and dust in the process of carbon black production will cause pollution to the environment. Therefore, the carbon black industry is divided into high pollution and high energy consumption industries by the state. Along with our country “double carbon” target release, the environmental protection policy of all walks of life is further tightened, the national energy consumption double control policy increasingly strict. Energy conservation, emission reduction and comprehensive utilization of resources in the carbon black industry have become the key direction of the development of the industry. Enterprises with small scale and weak pollution control ability may face liquidation, and the market concentration of the carbon black industry will be improved.