Short-term high levels in high-temperature coal tar prices

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　　Recently, domestic prices for high-temperature coal tar have experienced significant fluctuations. Prices declined continuously from April to early May, but in late May, driven by factors such as the ongoing tightening of safety regulations, the market rebounded from its lowest levels. As of June 4, the mainstream price for high-temperature coal tar in Shanxi was 4,260 yuan per ton (the same unit applies below), representing an increase of 450 yuan compared to May 21. 　　“The anticipated tightness in supply has materialized; steady downstream demand continues to support the market. The auction prices for coke have been rising consecutively. It is expected that the trend of rising coal tar prices will be quite evident in early June. However, given the rapid pace of price increases, the follow-up hikes in downstream products have slowed down. After mid-to-late June, the market may need to be cautious about the risks associated with these elevated price levels. ”said Bian Xiaosong, an analyst at Zhuochuang Information. 　　Stricter safety regulations and reduced supply: In the first quarter, as the price of high-temperature coal tar rose to 4,450 yuan, traders rushed to sell their stockpiles, resulting in a significant drop in overall inventory levels. From April to early May, market prices continued to decline; under the inventory control measures implemented by intermediaries, the spot supply remained tight. Recently, production control measures in coking enterprises in key production areas such as Shanxi and Shaanxi have been significantly strengthened, leading to a decline in the industry’s operational rate. According to Longzhong Information, last week the capacity utilization rate of domestic coking enterprises was 75.99%, a decrease of 0.86 percentage points on a weekly basis. 　　“The tight supply situation in this industry will continue, but the implementation of safety controls will proceed gradually; it will be difficult to reduce the supply volume significantly in a short time. The actual degree of production reduction will still depend on the effectiveness of environmental protection and safety inspection measures. A low inventory base, coupled with expectations of supply contraction, constitutes the core driving factor behind this round of price rebounds. ”Bian Xiaosong said. 　　Essential demand provides support for market prices. At present, the leading manufacturers in the downstream sectors of high-temperature coal tar, such as needle coke and coal tar pitch, rely on long-term supply agreements to ensure a steady flow of deliveries, and it is this essential demand that supports prices of these raw materials at a stable level. 　　“From April to early May, downstream processing enterprises conduct concentrated maintenance, leading to a decline in market demand. In late May, as the maintenance work came to an end, operations resumed gradually, demand from essential sectors picked up steadily, and the market had a foundation for upward movement. From a supply and demand perspective, prices are also set to rise in this wave. ”Bian Xiaosong said. 　　According to Longzhong Information, last week the operating rate of processing plants in China was 53.05%, a decrease of 2.16 percentage points on a weekly basis ； The operating rate of carbon black was 69.59%, up 0.50 percentage points on a month-on-month basis. Some small factories in Shandong region are gradually resuming operations, but some enterprises in North and East China are still under maintenance. It is expected that market activity will remain stable with only a slight upward trend next week. 　　“On June 5, major coke producers raised coke prices for the sixth time. Most of these producers continued to operate at normal levels; the supply of high-temperature coal tar is expected to remain stable. Meanwhile, the operational rate of downstream industries stayed high, indicating strong overall demand. ”Liu Mingjia, an analyst at Longzhong Information Weekly, believes so. 　　“In late June, although there was a shortage in the high-temperature coal tar market, enterprises became more cautious in their procurement. Industry analysts predict that 4,300 yuan may become a psychological resistance level for downstream players. Should prices rise to this level, their willingness to purchase is expected to turn more cautious, with reduced appetite for buying at such high levels; as a result, the market may experience a slight temporary correction. However, supported by the expectation of reduced supply, there is no basis for a sharp drop in prices, so the room for price decline is limited. ”Bian Xiaosong said. 　　Divergent profits from bidding wars to maintain prices: With weak profits in the coking core business, exporting coal tar has become an important way for coking companies to offset losses, driving a strong willingness to maintain high prices. “Recently, coking enterprises in various parts of the country have carried out competitive bidding for coal tar. Last week, the final transaction price of high-temperature coal tar at Shandong Laigang was 4,200 yuan, with 1,000 tons being auctioned ； The winning bid price for high-temperature coal tar in the tender conducted by Hebei Huafeng Coal Chemical rose to 4,200 yuan ； At Shanxi Pengfei Group Co., Ltd., the transaction price of high-temperature coal tar rose to 4,250–4,260 yuan, with an auction volume of 2,400 tons. ”Liu Mingjia said. 　　Notably, the divergence in profitability across the industrial chain has become a key factor hindering a significant rise in prices. Data from Longzhong Information Monitoring show that last week, the overall profit margin of the coal tar industry chain declined, with the profit per ton of coke amounting to 66 yuan, a decrease of 6 yuan on a weekly basis ； In the Shandong region, the profit from the deep processing of coal tar was 41.5 yuan, a decrease of 9 yuan on a weekly basis ； The new price for carbon black in Shandong has not yet increased; there are also difficulties in securing actual orders. The profit for that week was -165 yuan, a decrease of 217 yuan compared to the previous week. Under pressure from rising costs, carbon black manufacturers lack the willingness to purchase at high prices, which limits the upward potential of coal tar from the demand side. 　　Overall, with the expectation of supply contraction coupled by strong demand from downstream sectors, high-temperature coal tar is likely to remain at high levels in the short term, though the room for further increases has significantly narrowed. Liu Mingjia believes that the expectation of another price increase for coke in the sixth round will support the profits of coke manufacturers; in the short term, high prices for coal tar will remain stable, but further increases will depend on the developments in the prices of downstream products.