China's carbon black industry chain

1. Overview

Carbon black is a black powdery or granular substance produced by the cracking and incomplete combustion of hydrocarbons, mainly composed of carbon elements. Its microcrystals have a quasi graphite structure and are concentric oriented, consisting of nearly spherical or other irregularly shaped particles with a basic particle size of 10 to 100 nm. According to the purpose, carbon black is generally divided into rubber carbon black and non rubber carbon black. In terms of the industrial chain, the upstream of the carbon black industry is mainly composed of raw materials such as coal tar, anthracene oil, and ethylene tar; Downstream, it is mainly used in industries such as tires, rubber products, plastics, coatings, ink, batteries, etc.

2. Upstream market analysis

Currently, the upstream of the carbon black industry is mainly composed of raw materials such as coal tar, anthracene oil, and ethylene tar. Among them, coal tar and anthracene oil are by-products generated from coking, accounting for more than 80% of raw materials, while ethylene tar only accounts for 16.6% of raw materials.

(1) Coal tar

Coal tar is a black or dark brown viscous liquid with a pungent odor generated during the distillation of coal. It can be divided into low temperature coal tar, medium temperature coal tar, and high temperature coal tar according to the distillation temperature. According to data, the output of China's coal tar industry in 2020 will be 26 million tons, and it is estimated that the output will be about 27.3 million tons in 2022.

(2) Anthracene oil

Anthracene oil is a fraction of the coal tar industry with a distillation range of 280 ℃ - 360 ℃. It is a raw material for manufacturing electrodes, pitch coke, carbon black, wood preservative oil, and other materials, containing over 90% aromatic hydrocarbons and a small amount of gum. According to data, China's anthracene oil production in 2020 is 2.37 million tons, and it is estimated that the production will be about 2.52 million tons in 2022.

(3) Ethylene tar

Ethylene tar, also known as ethylene cracking tar, is a by-product of a naphtha steam cracking ethylene production unit. Its yield varies depending on the composition of the steam cracking feedstock, typically about 10% - 13%. It is an important raw material for organic chemical synthesis. Due to the impact of light feedstock, the overall growth rate of ethylene tar production in 2016-2019 was limited. Due to the successive production of six ethylene cracking units in 2020, the ethylene tar production increased to 2.0514 million tons.

3. Midstream Market Analysis

At present, the overall capacity utilization of China's carbon black industry is in a low state. At the same time, as domestic environmental protection becomes stricter and market competition continues to intensify, the growth rate of capacity and output in China's carbon black industry has significantly slowed down. According to data, in 2021, the carbon black production capacity will be about 8.5 million tons, and the output will be about 5.2 million tons.

4. Downstream market analysis

In the downstream market, China's carbon black industry is mainly used in tires, rubber products, plastics, coatings, ink, batteries, and other fields. Among them, tires are the largest consumption area of carbon black in China, accounting for 66.7% of consumption in 2021. The second is other rubber products and plastics, accounting for 22.2% and 6.3% respectively.

Based on the analysis of the largest application field - tires, from 2017 to 2020, due to the low overall prosperity of the automotive industry, the production of rubber tires declined, but the overall scale is still large. With the recovery of the automotive industry market, the demand for tires will also significantly increase. According to data, in 2021, the output of rubber tire outer tubes in China was 899.108 million, a year-on-year increase of 9.85%.

In addition, against the background of national policies promoting the elimination of outdated production capacity, China's top tire companies are still expanding their production capacity in order to quickly seize market share, which will lead to a slight increase in the market demand of China's carbon black industry in the future, but the overall growth rate is limited, and the industry demand growth rate may continue to decline.