According to the latest report from Chem. Analyst, in May 2024, the prices of Russian carbon black continued to show an upward trend due to the increase in downstream market demand, particularly the recovery of the automotive secondary market. This growth trend is not only attributed to the increase in the transport volume of Russian carbon black to the Danube River through Black Sea freight and shadow fleets, but also to the positive factor of a 13% rebound in Danube River transportation volume due to rising temperatures and water levels.
The growth in Black Sea trade volume, especially the supply of liquefied natural gas (LNG) from Russia to Europe, has stabilized the European natural gas market, further benefiting the European natural gas cracking olefin and tire markets. The FOB (Free On Board) price of Russian carbon black N220 at the Novorossiysk port is estimated to have reached $1,170 per ton, representing a year-on-year increase of 4%. The main reason for this price increase is the increase in crude oil supply from Russian refineries and the tightening of supply, which has boosted market demand for carbon black.
Meanwhile, the active second-hand car market has also had a positive impact on the carbon black market. In April, second-hand car sales increased both year-on-year and month-on-month, leading to a decrease in average prices. This trend continued after the May Day holiday, with dealers indicating that demand is recovering, further proving the growth momentum of the second-hand car market. The delivery volumes of carbon black N220 and styrene-butadiene rubber (SBR) in April and May also reflected this trend, with Russian carbon black prices remaining high despite a slowdown in demand in other major market segments.
Avito Automotive's report further confirmed the prosperity of the second-hand car market. In April, second-hand car prices grew by 13.9% year-on-year and 5.8% month-on-month compared to March. Since the beginning of 2024, the supply of second-hand cars has been steadily increasing, with advertising prices in the first week of May increasing by 27.9% year-on-year.
However, while the trade volume on the Danube River increased in April, global trade disruptions, especially through the Red Sea and the Middle East, have led to more cargo ships joining the ranks of shadow tankers. This has resulted in a significant increase in freight rates from Northeast Asia to Northern Europe, adding pressure to the costs of European importers of carbon black N220 and other petrochemical raw materials.
Despite this, the European economy showed signs of recovery in February and March, partially due to increased imports of LNG from Russia. According to the Russian Daily, the import volume of LNG in the first quarter of 2024 will increase to 4.3 million tons, with prices lower than those from the United States, providing a significant price advantage for the European market. However, rising freight rates are eroding European production profits.
Despite challenges such as potential EU negotiations to extend the ban on SBR and N220 carbon black (which is set to take effect in July), Russian analysts predict that due to the inability of European countries' domestic production capacity to meet higher market demand before the 2026-2027 fiscal year, Russia's carbon black exports will continue to grow strongly and are expected to further push up carbon black prices. This trend is expected to facilitate the continued export of Russian carbon black to Europe at a higher growth rate in the second quarter.