Lead-in: This week, the high-temperature coal tar market stabilized and bottomed out. Cost support from raw material price parity has returned, and the downward room for ethylene tar has essentially closed. The short-term decline is narrowing, and expectations of a price hike are growing.
I. Ethylene Tar Market Reaction
In the first half of the year, ethylene tar prices experienced a significant roller-coaster ride: first, prices surged to a historical high for the year, then suffered a sharp decline driven by demand, and later fluctuated due to supply conditions. Looking at the entire first half, the core drivers of the ethylene tar market were centered on four dimensions: international crude oil costs, price linkage with high-temperature coal tar, commercial supply from cracking units, and downstream demand.
II. Homogeneous Product Market Reaction
From the supply side, as most independent coking enterprises in Shanxi are operating on thin margins and some small and medium-sized coking plants are experiencing losses, profit compression has dampened coking plants' enthusiasm for production. Consequently, the supply of high-temperature coal tar has shown a sustained slight decline recently. Moreover, overall downstream operating rates are high, and in some regions, the supply and demand balance for coal tar is tight. Therefore, heading into the end of the month, the coal tar market has rebounded.
Carbon black is a major downstream product for ethylene tar. As the month-end approaches, carbon black enters a new pricing cycle. Currently, new orders in the raw material coal tar market are expected to continue rising, with cost factors driving negotiations in the carbon black market. Some carbon black offer prices have increased, and firm transactions are under negotiation. However, weak demand performance is capping market gains, and new orders are expected to maintain firm pricing.
Domestic trade marine fuel wholesale negotiations are expected to mainly trend downward in the third quarter. Key points to watch: On the supply side, refineries are expected to cut operating rates and increase maintenance in Q3, affecting the release volume of low-sulfur asphalt. Tax issues are also difficult to resolve, so supply of taxed 180cst finished product resources may decline. On the demand side, under the expectation of the traditional peak season of September (Golden September), terminal vessel bunkering volumes may see a slight increase, but the market downtrend could suppress some procurement demand. Bunker buyers are mainly making inquiries based on rigid demand when prices are low. On the cost and inventory side, with the lifting of shipping restrictions in the Strait, international crude oil prices have given back earlier gains, which may ease processing cost pressure for refineries in Q3. Prices of low-sulfur asphalt, residue oil, and other blending components are falling, weakening the cost support for blending 180cSt fuel oil. Wholesalers are cautiously controlling inventories, adopting a sales-driven procurement approach, which exerts bearish pressure on future prices. Overall, domestic trade marine fuel wholesale negotiations in Q3 have room for decline. The national mainstream wholesale negotiation range for 180cst is expected to be around 5,000-5,300 yuan/ton.
Coating pitch's main downstream is anode materials. Recently, downstream demand has been good, with the power and energy storage sectors providing the main support. In June, artificial graphite anode prices remained stable, with production and delivery proceeding according to long-term contract plans. Trends in raw and auxiliary materials diverged: needle coke and graphitization processing prices rose, while low-sulfur coke prices fell. The capacity utilization rate for artificial graphite anodes was relatively high, with leading companies running at full capacity. Downstream demand continues to increase, primarily driven by demand growth from large-format battery cells and power blade batteries.
IV. Summary
Yangzi Petrochemical entered maintenance on May 5, 2026, for an expected 55 days; Sinopec-SK (Wuhan) Petrochemical entered maintenance on June 4, 2026, for an expected 52 days; Hainan Refining & Chemical started scheduled maintenance on June 6, 2026, for an expected 120 days, reducing commercial volumes. Shenghong Petrochemical entered a 45-day maintenance on July 1, further reducing external supply. Gulei Petrochemical’s units have not yet started up, so there is no external sales currently. Maoming and Jieyang Petrochemical switched to self-use in June, and Guangxi Petrochemical uses two-thirds for self-consumption, leading to a contraction in external supply.
As the month-end approaches, carbon black enters a new pricing cycle with a willingness to support prices. Moreover, overall downstream deep-processing operations for coal tar are at a high rate, and in some regions, the supply-demand balance for coal tar is tight. Therefore, certain positive factors have emerged in the high-temperature coal tar market, and coal tar is expected to rise in the short term. Currently, high-temperature coal tar deep-processing units, having lost cost support previously and facing sluggish terminal demand, see limited亮点 for deep-processing products. Although coal tar pitch, as the main downstream, performs relatively well, other products show no notable strengths. Industrial naphthalene prices have risen slightly, anthracene oil is struggling to follow the uptrend, and light oil fractions are flat. Therefore, the overall support from other deep-processing products for coal tar price hikes is limited.
Looking at the end-market tires, entering mid-to-late June, the tire industry is affected by multiple factors: weak domestic terminal demand in the off-season, increasing export resistance, and high raw material cost pressures. As a result, order volumes in the tire industry are shrinking, delivery pace is slowing, and enterprise inventories are accumulating. Many tire manufacturers have initiated voluntary production control and cuts. In the short term, the domestic tire industry will maintain an operating pattern of "weak demand, low operating rates, and high inventories."
Overall, at this stage, positive factors in the domestic high-temperature coal tar market temporarily prevail, supporting the market rebound. However, further upward movement will require additional positive catalysts, and the momentum appears insufficient for sustained growth.
Domestic trade marine fuel: On the supply side, refineries are expected to cut operating rates and increase maintenance in Q3, affecting the release volume of low-sulfur asphalt. Tax issues remain difficult to resolve, so supply of taxed 180cst finished product resources may decline. On the demand side, under the expectation of the traditional peak season of September (Golden September), terminal vessel bunkering volumes may see a slight increase, but the market downtrend could suppress some procurement demand. On the cost and inventory side, with the lifting of shipping restrictions in the Strait, international crude oil prices have given back earlier gains, weakening the cost support for blending 180cSt fuel oil. Wholesalers are cautiously controlling inventories, adopting a sales-driven procurement approach, which exerts bearish pressure on future prices. Overall, domestic trade marine fuel wholesale negotiations in Q3 have room for decline.
In summary, in the short term, current ethylene tar spot supply remains persistently tight. Coupled with the strengthening of the high-temperature coal tar market, which provides strong cost support, the downside room for the product is essentially closed, and the downtrend is gradually ending. Driven by positive raw material factors, the market may see expectations of price increases. Looking at a longer cycle, multiple domestic ethylene cracking units are expected to resume operations successively in August, leading to a concentrated release of supply. As supply increments materialize as expected, the ethylene tar market is likely to enter a phase of high-level consolidation. If downstream demand from carbon black, anode materials, and other sectors fails to recover simultaneously, the supply-demand balance could loosen, posing a risk of price declines in the future.
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