Introduction: The current market backdrop for ethylene tar
Today, high-temperature coal tar prices continued to move higher, driven chiefly by persistently falling operating rates at coking plants and shrinking supply on the supply side. In an auction of high-temperature coal tar held by Huaibei Linhuan Coking Co., Ltd. in Anhui Province, the starting price was set at 4,750 yuan/ton (cash settlement). The final transaction price settled at 5,470 yuan/ton, up 695 yuan/ton, for an auction volume of 1,000 tons.
Against this backdrop, ethylene tar — a fellow tar-based product alongside high-temperature coal tar — is also facing a relatively favorable external environment. High crude oil prices provide solid cost support, while the continued shift toward lighter feedstocks has constrained ethylene tar's own output and kept supply tight. That tight supply-demand pattern is unlikely to change over the near term.
I. Cost-side analysis: High crude prices lay a solid foundation
Crude oil, as the core feedstock for ethylene crackers, has a direct and pronounced effect on the cost floor of ethylene tar. International crude prices are currently holding at elevated levels, providing ethylene tar with relatively firm cost support from below.
In terms of the transmission mechanism, rising crude prices first push up the cost of ethylene cracking feedstocks, which in turn lifts the cost baseline for ethylene tar production. With the international geopolitical situation still complicated, OPEC+ output cuts continuing, and global crude inventories relatively low, crude prices are more likely to remain elevated and volatile over the near term, creating a positive cost-side driver for ethylene tar.
What deserves particular attention is that high crude prices affect ethylene tar not only at the cost level, but also through sentiment. When the entire energy and chemical chain is in a cost-push rally, it is reasonable for ethylene tar, as one link in that chain, to be carried upward along with the general tide.
II. Supply-side analysis: The light-feed trend continues to constrain output
The supply side is one of the core factors underpinning the current firm tone of the ethylene tar market.
In recent years, the adoption of lighter feedstocks for ethylene production has become a mainstream industry trend. Replacing traditional naphtha and heavy oils with light raw materials such as ethane and light hydrocarbons offers notable economic advantages — higher yields, lower energy consumption, and fewer by-products — and is being adopted by a growing number of producers. The direct consequence, however, is that ethylene tar, a by-product of the ethylene cracking process, is generated at a significantly lower rate as the feedstock slate becomes lighter. As a result, the volume of commercially available ethylene tar has remained persistently low.
Looking at current conditions, the tight supply situation in the domestic ethylene tar market has become fairly evident. On one hand, new ethylene capacity, such as Tarim Petrochemical, which was commissioned this year, is built predominantly around light-feed routes and contributes little additional ethylene tar output. On the other hand, existing crackers are steadily raising the share of light feedstocks they process, further compressing ethylene tar yields. In this context, the supply side offers solid support to ethylene tar prices.
III. Demand-side analysis: Substitution effect and essential demand provide dual support
On the demand side, ethylene tar is one of the raw materials used in carbon black production, and the incremental substitution demand it may attract following the sharp rise in high-temperature coal tar prices deserves attention.
As coking plant operating rates continue to decline, the by-product supply of coal tar is being passively scaled back. Supply tightness is intensifying, the supply-demand contradiction is becoming more prominent, and this has given high-temperature coal tar prices strong supply-side impetus for their sustained rally.
High-temperature coal tar prices have now broken through the 5,400 yuan/ton mark, while ethylene tar prices in North China are currently around 4,350 yuan/ton — leaving a notable gap between the two. As high-temperature coal tar keeps climbing, some carbon black producers will, within technically permissible limits, raise the share of ethylene tar in their feedstock in order to control raw material costs, substituting it for a portion of high-temperature coal tar. The wide price differential makes ethylene tar increasingly cost-competitive in carbon black production, creating additional room for demand growth.
In addition, with the Mid-Autumn Festival and National Day holidays approaching, downstream users in the carbon black and coating pitch segments have essential pre-holiday stockpiling needs, which will strengthen their near-term purchasing appetite for ethylene tar and provide a phase of demand support.
From a broader perspective, although the carbon black market is experiencing a "high prices, slow sales" environment due to weak demand from tire end-users, and coating pitch buyers are also resistant to high-priced feedstocks, downstream carbon black and coating pitch producers still need to procure raw materials on an essential basis to keep operations running. This provides basic volume support for the ethylene tar market.
IV. Overall forecast
Short-term trend: With multiple supportive factors converging — high crude oil prices providing cost support, lighter feedstocks keeping supply tight, the strong high-temperature coal tar market lifting sentiment, and essential stocking demand ahead of the holidays — the ethylene tar market is expected to remain on a firm footing, with some room for prices to edge higher. On the whole, prices are more prone to rise than to fall.
Medium-term trend: After the holidays, the market should keep a close eye on the following variables. First, whether high-temperature coal tar can hold at current highs; if coking plant operating rates recover, supply-side support for coal tar could weaken at the margin. Second, whether downstream tire and end-market demand can stage a substantive recovery; if the "high prices versus weak demand" standoff continues, it may cap further upside. Third, any directional change in crude oil price trends.
If crude oil prices pull back temporarily, or if high-temperature coal tar retreats from its highs after the holidays as coking plants resume production, ethylene tar prices could follow suit. Conversely, if geopolitical factors push crude prices still higher, or if the contraction in coal tar supply extends beyond expectations, ethylene tar could still see larger-than-expected gains.
On balance: over the near term, the ethylene tar market will remain firm, underpinned by cost and supply support. Market participants are advised to closely track crude oil price movements, changes in high-temperature coal tar tender prices, and actual transaction conditions in the downstream carbon black and coating pitch markets, so as to keep pace with market momentum and formulate procurement and sales strategies accordingly.
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