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The Indian carbon black (CB) market is witnessing a favourable shift in import dynamics. Imports of lower-priced Russian CB declined by ~60% during the first six months of CY26 compared with CY25, primarily due to disruptions at Russian refineries. Meanwhile, imports from China have increased, albeit at significantly higher prices of ~US$1.3/kg versus ~US$1/kg for Russian imports. Further, Chinese suppliers, like Jiangsu have announced additional price hikes, which could further increase the landed cost of imported CB into India. This evolving import landscape provides domestic manufacturers such as PCBL with greater pricing flexibility in the domestic market, potentially supporting higher realizations and EBITDA/tn. Management has guided for a 14–15% YoY increase in FY27 EBITDA/tn over FY26, implying a full-year EBITDA/tn of ~INR17,000. However, we believe the current outlook could prove conservative if Russian CB supply continues to contract and global capacities remain offline, resulting in a tighter demand-supply balance and further strengthening pricing dynamics globally.

PCBL’s sensitivity to EBITDA/tn remains significant, a ~INR1,500/tn increase over our FY28 EBITDA/tn assumption of INR17,500 would translate into nearly a ~14% increase in FY28E EPS. We remain positive on PCBL and upgrade the stock to ‘Buy’, valuing it at 25x FY28E EPS, with a target price of INR391. A 10% upside to our FY28 EBITDA/tn assumptions could potentially translate into an additional ~23% upside to our target price, highlighting the strong operating leverage to improving industry pricing and spreads.

Russian CB imports decline amid supply disruptions:

India imported ~6,626tn of CB from Russia during April–June’25, imports volumes are now down ~40% YoY in JanJune’26. The decline was largely driven by disruptions to Russian refining activity, which tightened the availability of Russian carbon black and reduced its exports to India. Russia has historically been a low-cost supplier of CB, and the availability of competitively priced Russian material had exerted pressure on domestic CB pricing, resulting in lower realizations and EBITDA/tn for Indian manufacturers.

Import volumes shift towards China, Korea, Turkey:

Despite the decline in Russian supplies, India’s overall CB imports have remained broadly stable YoY, with sourcing shifting towards China, Korea and Turkey. China Chinese CB, however, is priced at a premium to Russian material, with realizations of ~US$1.3/tn versus ~US$1.0/tn for Russian CB. While China provides an important alternative source of supply, its pricing is not as competitive as Russian CB.

Higher Chinese feedstock costs support CB prices:

The key reason for the pricing differential lies in the feedstock economics. Chinese producers predominantly use Coal-Based Oil (CBO) as feedstock, which has relatively higher economics compared with the CB Feedstock (CBFS) route used by Russian producers. As a result, Chinese CB carries a higher cost base and is less likely to exert the same degree of pricing pressure on Indian manufacturers as Russian CB.

The shift away from Russian CB towards relatively higher-cost Chinese material is therefore positive for domestic CB pricing and could support an improvement in realizations and EBITDA/tn for Indian manufacturers

Lower import pricing pressure can be positive for Indian CB producers:

Jiangsu Youcai, a major Chinese carbon black manufacturer, has announced a price adjustment across its entire carbon black product portfolio. The increase in Chinese CB prices is expected to further raise the landed cost of imports into India, thereby reducing the scope for low-priced imports and easing dumping pressure on domestic manufacturers such as PCBL. With Russian supplies also constrained, the combination of lower availability of low-cost Russian CB and higher Chinese pricing should provide a more supportive pricing environment for Indian carbon black producers.

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