Recycled Material Gains Ground in Europe as Carbon Black Prices Hits Record High in July

European Carbon Black prices have showcased a surge in July due to rising crude oil and naphtha prices and improving downstream demand amidst supply challenges across European tire markets. The prices peaked around USD 1550/MT for Hamburg bound deliveries the previous month. Adding worries amongst the tire suppliers and other industrial partners, many tire producers and rubber products manufacturers have been shifting their gears towards recycled Carbon Black (rCB). The latest to commit to the recycled Carbon Black procurement has been Continental tires.

Carbon Black prices have remained high since the beginning of 2024 as Red Sea disruptions kept the Asian-European trade strained. Russian invasion had previously forced European Commission to sanction Russian imports of Carbon Black, Styrene Butadiene Rubber etc. to be banned gradually with their implementation of a full ban beginning with 1st July, a market player told ChemAnalyst. Russian Carbon Black imports, though remained relatively cheaper were re-routed through Hungary and Poland into the European markets for the past one year. However, many importers have increased their APAC volumes from South Korea and India. The Suez Crisis further strained supply lines and the shortages of carriers through Indian Ocean further aggravated the European supply. Germany reported growth in their car figures in June which has added to significant uptick for upstream tire producers to revise their demand projections and improve their guidance. Last month, Hubtrac revised Q3 expectations for tires and hence Carbon Black prices surged in July end at highs of FD Hamburg 1550/MT, 50% higher than January prices.

Asia bound deliveries on the other hand remained intact and their orders have been lined up for pickup at the respective ports. July also saw initially APAC contracts for July and August bound deliveries were sold in the derivatives market as the European importers observed headwinds in EV segments and adjusted their expectations accordingly. The prices in Asian markets hence fell due to more contracts and deliveries were available. As shipping carriers have started shifting towards Indian Ocean on the account of US Gulf going offline, major stocks of Indian deliveries for exports have now come online with revised bids for deliveries to Europe, particularly Carbon Black as Ex-Durgapur Carbon Black N220 grade surged in spot markets from USD 1435/MT to USD 1485/MT in the last two weeks of July.

In this context, Continental inked agreement with Pyrum with a long term purchase agreement to secure stronger Carbon Black supplies at lower prices. The rCB derived out of the end-of-use product cycles to add into the sustainability and circularity obligations of companies and ease reliance on other producers. However, ChemAnalyst assessed that high carbon cost, currently going around EUR 68/ton and energy intensiveness of the recycling process, the rCB costs to remain uncompetitive with virgin Carbon Black (vCB) despite substantial gains in prices, reported a market player in Europe. Newer capacity additions through Orion, A.G Continental tires etc. to begin their operations by 2025 while Carbon Black supply agreement with Russia continues to be negotiated by European commission.