Lead: In the first half of 2026, the ethylene tar price range was disrupted by the blockade of the Strait of Hormuz at the end of February, leading to a sharp rise in the market amid supply tightening. Subsequently, high prices failed to pass down to consumers, triggering a widespread decline. The main factor influencing ethylene tar market fluctuations shifted from supply-side to demand-side.
From January to early June 2026, the ethylene tar market experienced multiple stepwise fluctuations, with the market trend constantly revolving around four core variables: international crude oil costs, comparison with high-temperature coal tar prices, commercial supply from cracking units, and downstream carbon black demand. In January, strong crude oil, combined with reduced refinery outflows and rising coal tar prices, supported a price uptrend. In February, declining coal tar prices dragged the market into a downturn. At the end of February, fears of supply disruption due to the strait incident triggered a short-term speculative surge. In April, multiple bearish factors—weak crude oil, ample supply, and sluggish downstream demand—pushed prices steadily lower. In May, synchronized recovery in upstream and downstream sectors, along with expectations of reduced output from cracker maintenance, spurred a rebound. By early June, weakening coal tar and carbon black markets once again pressured ethylene tar, and after fully absorbing the negative factors, prices gradually stabilized with no clear catalyst for recovery.
In January and February, ethylene tar production proceeded as planned, with output exceeding that of the same period in 2025. From March to June, concerns over potential raw material crises due to reduced Middle Eastern crude oil supply led ethylene tar producers to implement defensive output cuts, mainly concentrated in coastal refineries using Middle Eastern crude. In addition to these defensive cuts, some companies brought forward their planned maintenance from the second half to the first half, further exacerbating the reduction in ethylene tar output.
In the first half of the year, overall supply of high-temperature coal tar increased slightly. Coking enterprises generally operated near the break-even point, with profitability improving compared to the same period in 2025. Although some months saw localized environmental production restrictions, overall supply grew steadily and modestly, with domestic output rising slightly. Thus, high-temperature coal tar supply increased marginally in the first half.
As new capacity continued to come online, carbon black enterprises experienced a significant decline in overall profitability. In the first six months, the average profit margin for carbon black was -107 yuan/ton, down 96 yuan/ton year-on-year. However, operating rates still rose compared to the same period last year.
Based on supply and demand data, with the decline in crude oil prices and the reopening of the strait, July is likely to mark the return of supply-demand fundamentals as the dominant factor for ethylene tar in the second half. From August to December, previously idled ethylene tar units are expected to resume operations, leading to a shift towards ample supply. Therefore, in the medium to long term, there will still be short-term rebound opportunities for ethylene tar in July and August.
Taking supply and demand into account, the ethylene tar market in the second half of 2026 will face a mix of competing factors. On the supply side, with falling crude oil and restored strait traffic, July may see supply-demand fundamentals regain dominance. From August to December, the restart of previously idled units will likely make supply more abundant. However, new downstream carbon black capacities are scheduled to come online in the second half. Hence, in the medium to long term, prices are likely to fluctuate within a medium range. It is recommended to purchase and sell based on actual demand and to operate cautiously.
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