Core View: The domestic ethylene tar market exhibits a pattern of mainstream stability with localized adjustments, with the North China mainstream ex-factory price holding firm at 4,850 yuan/ton. Beneath this surface calm, multiple forces are brewing in the background. High-temperature coal tar, a homogeneous substitute, maintains an "easy to rise, hard to fall" trend, establishing a psychological floor for ethylene tar through relative pricing dynamics. However, the core downstream carbon black industry is trapped in a dual dilemma of cost squeeze and demand resistance, with negative feedback on high-priced raw materials continuously suppressing upside potential for ethylene tar. Currently, the market lacks a unilateral driver to break the deadlock; participants maintain a wait-and-see attitude, and the consolidation pattern is unlikely to change in the near term.
The cost transmission path for ethylene tar is complex. As a byproduct of ethylene cracking, its direct raw material costs have limited impact. However, in market pricing logic, the influence of international crude oil trends transmitted through related products such as fuel oil and naphtha cannot be ignored.
During this period, average international oil prices rose. Tensions between the US and Iran, along with Houthi attacks on Saudi Arabia, kept Middle Eastern geopolitical risks elevated. Combined with a significant drop in US production, these factors provided a solid floor for oil prices. Looking ahead, geopolitical risks are unlikely to fully ease in the short term, maintaining strong support for oil prices. While ethylene tar does not directly follow crude oil fluctuations, the bullish expectation for oil provides macro-level support for the entire energy and chemical product system, creating an objective psychological floor effect for ethylene tar.
More directly significant is the price parity support from high-temperature coal tar. Ethylene tar and high-temperature coal tar are substitutes in downstream applications such as carbon black production, where price differentials directly influence raw material selection. Currently, North China high-temperature coal tar prices are trading around 5,510 yuan/ton. Downstream carbon black enterprises constantly calculate which raw material offers better economic viability. As long as high-temperature coal tar does not experience a systemic collapse, the bottom for ethylene tar remains difficult to breach. However, the carbon black sector is constrained by weak demand. Current resistance to high-priced raw materials stems from insufficient profitability within the carbon black industry itself. When overall procurement willingness among carbon black enterprises is low, simple price advantages fail to translate into incremental demand.
This week, new order negotiations in the domestic carbon black market were generally sluggish, with thin trading activity. New orders for raw material coal tar saw mixed price movements with limited magnitude. While there was some cost-side support, downstream resistance was evident in the first half of the week, with some participants expecting lower prices. After raw material prices were announced, market quotes became firmer, with downstream buyers primarily taking delivery based on rigid demand.
The current predicament for the carbon black industry lies in being locked into high raw material costs while facing pressure from tire manufacturers on the demand side, severely squeezing profit margins. Profit monitoring data indicates that theoretical profits for N330 grade carbon black in Shandong factories narrowed to less than 100 yuan after the holiday, representing a substantial shrinkage compared to previous periods. In this context, carbon black enterprises are highly sensitive to raw material procurement, and any attempt to push prices up may trigger stronger resistance.
Structural pressures on the demand side warrant closer attention. Although tire manufacturer operating rates are gradually recovering, they have not yet returned to pre-holiday levels. Tire producers themselves face issues with finished goods inventory and inefficient cost pass-through, leading to conservative procurement rhythms for carbon black. The characteristic of "prices without volume" has emerged in certain regions, with the sluggishness of new order transactions exceeding supplier expectations.
Continued rises in high-temperature coal tar will strengthen the price parity support for ethylene tar. However, if carbon black reduces output or further squeezes prices due to cost pressures, it will directly cut procurement volumes of ethylene tar. This scenario acts as a double-edged sword for ethylene tar. Demand for ethylene tar in the carbon black sector largely depends on whether the industry can find a new equilibrium between costs and selling prices.
Wanhua’s unit remained shut down, while Yangzi Petrochemical resumed operations. These opposing supply changes offset each other, resulting in no global impact on supply volumes. Regarding trading sentiment, cautious attitudes dominate, with participants leaning towards a wait-and-see approach. The market is currently in a stalemate characterized by "difficulty moving up or down," supported by costs but lacking demand-driven momentum.
In contrast to the stability of ethylene tar, the homogeneous product high-temperature coal tar exhibited distinct regional divergence this week. Auction prices at Shandong Laigang Steel rose by 60 yuan to 5,510 yuan/ton, whereas Shanxi Pengfei started auctions at higher prices but settled 50 yuan lower than last week at 5,550 yuan/ton. An auction by Inner Mongolia Guangju even failed to attract bids. This mix of rising and falling prices reflects widening differences in supply-demand fundamentals across producing regions. Nevertheless, the underlying logic of "easy to rise, hard to fall" for high-temperature coal tar remains intact. Three pillars support market sentiment: expected production cuts due to coking enterprise losses, recovery in operating rates following the end of deep-processing maintenance seasons, and the absence of inventory pressure on coking plants. For ethylene tar, the sustained high operation of its substitute implies persistent price parity advantages, serving as the most direct psychological support.
Ethylene tar supply is primarily determined by the operating loads of ethylene cracking units rather than self-profit drivers. Changes in supply this week were concentrated in individual unit adjustments: Wanhua’s unit remained offline, while Yangzi Petrochemical restarted, resulting in limited net variation in overall supply. Additionally, Hainan Refining & Chemical restarted on October 20th; however, its ethylene tar is used internally and does not impact the open market.
Synthesizing fundamental factors across all dimensions, the ethylene tar market is likely to continue narrow-range consolidation next period, with mainstream prices struggling to achieve significant breakthroughs.
Support Factors: Strong expectations for high-temperature coal tar constitute the most direct psychological defense line. Next period, high-temperature coal tar is expected to maintain upward momentum. The "easy to rise, hard to fall" nature of coal tar prices ensures that ethylene tar retains its price parity advantage. Simultaneously, international crude oil is expected to trade strongly amid Middle Eastern geopolitical risks, providing macro-emotional bottom support for chemical products.
Suppression Factors: Negative feedback from the carbon black industry remains the core constraint. Resistance to high-priced raw materials by carbon black enterprises is not a short-term emotional reaction but a rational choice driven by weakening profitability. If coal tar continues to rise while carbon black fails to smoothly pass costs on to tire manufacturers, the probability of carbon black reducing output or further squeezing procurement prices will increase, thereby undermining the demand base for ethylene tar.
Key Variables: Focus should be placed on two aspects: First, the trajectory of auction prices in major high-temperature coal tar producing regions, particularly transaction changes in Shanxi and Shandong, which directly affect the price reference point for ethylene tar. Second, adjustments in carbon black operating rates and tire manufacturer procurement rhythms. If carbon black production cuts expand, ethylene tar demand will face more severe tests. Key monitoring points for ethylene tar include high-temperature coal tar auction dynamics and operational changes in downstream carbon black and coated asphalt industries.
At the current juncture, the contradiction in the ethylene tar market is clear: cost and substitution logic suggest it "should not fall," while demand and profit logic indicate it is "hard to rise." The mutual offsetting of these forces results in persistent stalemate within a narrow price range. Breaking this deadlock requires external variables: either unexpected surges in coal tar pulling the price parity center upward, or demand pull from carbon black or coated asphalt absorbing price increases. Until one of these signals becomes clear, wait-and-see attitudes and rigid-demand procurement will remain the market's dominant theme.
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