Carbon Black is an amorphous carbon with a very large surface area, ranging from 10-3000m2/g, and particle size of 10-100nm. Carbon black is a type of carbon element that exists in the form of nanoscale particles and amorphous carbon. It is a product of incomplete combustion or thermal decomposition of organic compounds (natural gas, heavy oil, fuel oil, etc.) under insufficient air conditions. Carbon black is one of the earliest developed, applied, and currently produced nanomaterials by humans, and is listed as one of the 25 basic and fine chemical products in the international chemical industry. The production process of carbon black can be divided into two categories: "incomplete combustion method" and "thermal cracking method". Incomplete combustion method (thermal oxidation decomposition method) includes oil furnace method, gas furnace method, spray method, lamp smoke method, trough method, drum method, and mixed gas method; The hot cracking method includes hot cracking method, acetylene method, and plasma method. Among them, the oil furnace method has the characteristics of multiple process adjustment methods, high thermal energy utilization, low energy consumption, and low cost, making it the main production process for carbon black. SP and Koqin black are prepared by the oil furnace method, while acetylene black is produced by the acetylene thermal cracking method.
Policies related to China's carbon black industry
From the current situation of China's automobile industry, based on the existing foundation of the automobile industry and the promotion of national strategic emerging industries and energy-saving and emission reduction regulations, through solid promotion and key breakthroughs during the 13th Five Year Plan period, it is possible to form low-carbon, information-based, and intelligent energy-saving and new energy vehicle advantages in the 14th Five Year Plan period. With the development of the automotive industry, the carbon black industry will also usher in new development opportunities. In recent years, the country has successively issued a series of relevant policies and regulatory documents such as the "Guiding Catalogue for Industrial Structure Adjustment", which has pointed out the direction for the development of the carbon black industry and promoted the differentiated development of China's carbon black products towards high-end, green, and branded directions.
Carbon black industry industry chain
The upstream of carbon black production is raw material oil, which is mainly divided into coal tar, ethylene tar, anthracene oil, etc; The midstream of carbon black production includes various types of carbon black, which can be divided into two categories: ordinary N-series carbon black and special carbon black; The downstream of carbon black production is various carbon black application industries, with tires being the largest application industry of carbon black, followed by rubber products, and finally the field of special carbon black. Special carbon black is widely used as a plastic coloring agent, anti UV agent, and conductive agent in plastics, ink coatings, lead-acid batteries, as well as lithium batteries and other products. So the carbon black industry chain mainly consists of three aspects: raw materials for carbon black production (coal tar, ethylene tar), carbon black production equipment, and downstream customers for carbon black use.
In recent years, the overall production of rubber tire outer tubes in China has remained above 800 million since 2018. According to statistics, as of 2022, the production of rubber tire outer tubes in China was 856 million, a year-on-year decrease of 4.78%. Due to the soaring domestic car sales, it is driving a new round of car tire reshuffle. The domestic tire market has now become a battleground for major tire brands. In the future, there will be four major trends in China's tire market, which are also issues that major tire wholesalers should consider. The four major trends in domestic tires are: high-performance, energy-saving and environmentally friendly, green tires, safety and intelligence, and winter or all-weather tires.
Analysis of the Development Status of China's Carbon Black Industry
China is the country with the highest global carbon black production, with nearly half of the world's carbon black produced in China. There is a certain structural overcapacity in China's carbon black industry, and homogeneous competition is relatively severe. In the low-end carbon black product market, market competition is fierce, product price adjustments are difficult, and industry profit margins are limited. However, in the mid to high end product market, such as low rolling resistance carbon black and high-performance carbon black required for green tires, there is still a large demand gap, maintaining a high profit level. In addition, there are significant differences in the profitability levels of carbon black enterprises in China. Some enterprises with complete industrial structures, innovative capabilities, high cost control levels, and relatively complete sales networks have significantly higher profitability than the average industry profit level. At present, China's carbon black industry has shifted from a high-speed growth stage to a high-quality development stage. With the increasing constraints of resources and environment on the industry, the development of the industry is full of complexity and uncertainty. According to statistics, as of 2022, the production capacity of China's carbon black industry is about 8.51 million tons, the output is about 4.71 million tons, and the demand is about 4.004 million tons.
Since the beginning of the 21st century, the rapid development of China's automotive industry has driven the rapid development of tires and the entire rubber industry. Among them, carbon black, which is in high demand, is also deeply affected. Carbon black is a very important product in the rubber industry, and its usage is the second largest raw material after rubber, playing a crucial role in the product quality of tires and rubber products. In recent years, the overall market size of China's carbon black industry has shown an upward trend. By 2022, the market size of China's carbon black industry will be about 41.56 billion yuan. In 2022, due to the Russia-Ukraine conflict, the price of natural gas, etc., the price of carbon black will increase in the first half of the year. In the second half of the year, due to the low starting load of downstream tire enterprises, the price of carbon black will fall back. In 2022, the overall average price of carbon black in China will be about 10380 yuan/ton.
In terms of imports and exports, the Indian market was once an important export market for domestic carbon black companies. However, in recent years, due to trade friction measures such as anti-dumping and changes in raw material costs, Chinese carbon black enterprises have gradually reduced their exports to India. Affected by the COVID-19 in 2020, the price of Chinese chemical products has risen significantly, and the competitiveness of domestic carbon black in the Indian market has declined significantly, which is also one of the important reasons for the reduction of export volume. After 2020, the export volume of carbon black in China has grown rapidly. As of 2022, the export volume of carbon black in China has increased to 810000 tons, with an export value of 8.798 billion yuan. In 2022, the import volume of carbon black in China was 104000 tons, with an import amount of 2.407 billion yuan. In recent years, the average export price of carbon black in China has been listed as a whole, and the international competitiveness of carbon black products has gradually increased.
Key Enterprises in China's Carbon Black Industry
The internal competition in China's carbon black industry is extremely fierce. Sometimes, in order to reduce the inventory of rubber carbon black, many domestic rubber carbon black products have even reached a loss selling point. This situation is due to the disorderly expansion of carbon black factories in the Chinese market, which has caused oversupply of rubber carbon black production. Due to carbon black being a high energy consuming and polluting industry, national environmental control measures are becoming increasingly strict. Large carbon black enterprises operate strictly in accordance with national requirements in all aspects, and their operating rates will not be greatly affected. Small carbon black enterprises face the risk of production restrictions or even shutdowns at any time due to non-compliance with various environmental indicators. From the perspective of competitive situation, national environmental control and elimination of outdated production capacity are beneficial for large carbon black plants. The country is also using environmental control measures to force the closure of outdated carbon black production capacity, promoting the healthy development of more powerful Chinese carbon black enterprises, increasing the concentration of Chinese carbon black enterprises, and enhancing the international competitiveness of Chinese local carbon black enterprises. Most of China's carbon black production enterprises are concentrated in Shandong and Shanxi. There are about 14 carbon black production enterprises in Shandong Province, with more than 23 in Shanxi. In addition to local enterprises, foreign-funded enterprises also invest in producing carbon black factories in China.
According to the operating data of five A-share listed companies in China, which mainly focus on carbon black, namely Black Cat Group (002068), Jinneng Technology (603113), Longxing Chemical (002442), Yongdong Group (002753), and Lianke Technology (001207), their operating income has maintained positive growth in 2022, but their net profit has significantly declined. The sales revenue of carbon black products of all five companies has maintained significant growth in the same direction, Jinneng Technology's carbon black product sales revenue growth even exceeded 70%. In 2022, five A-share carbon black listed companies will continue to increase their research investment, carry out research on carbon black production theory, application, new product development, advanced equipment, and other aspects to adapt to the constantly changing market demand and enhance the overall competitiveness of the domestic carbon black industry.
Analysis of the Development Trends of China's Carbon Black Industry
For a long time, there has been a certain structural overcapacity problem in China's carbon black industry, and homogeneous competition is relatively severe. In recent years, with the continuous impact of national supply side reform and environmental strictness, backward production capacity has accelerated integration and clearance, and the concentration of the carbon black market has further increased. Large carbon black enterprises have gained more market share. In addition, in the low-end carbon black product market, it is difficult to adjust product prices, fierce market competition, and limited industry profit margins. However, in the mid to high end product market, such as low rolling resistance carbon black and high-performance carbon black required for green tires, there is still a large demand gap, maintaining a high profit level. In the future, the scale and technological advantages of listed companies will be further highlighted.
