The coal tar market is accelerating its bottoming out
After a continuous rise throughout the year, the domestic coal tar market (mainly referring to high-temperature coal tar) peaked and then declined in early March, initiating a continuous downward trend. It began to accelerate its bottoming out in the middle and late April. As of April 22nd, the mainstream transaction price of domestic coal tar has dropped to 3,100 to 3,300 yuan per ton (the same below), a decline of about 24% compared with the peak in early March. The prices of some low-end products have fallen below 3,000 yuan, hitting a new low, which has led to a growing atmosphere of waiting and seeing within the industry.
In this regard, Shao Huiwen, a senior market commentator, said that the current continuous decline in the market mainly stems from negative factors such as the cooling of the peak demand season, the expected growth in supply, and the accumulation of inventories by downstream enterprises. Additionally, the profit-taking of trading enterprises that benefited from the soaring market at the beginning of the year and their rapid release of inventories have also accelerated the pace of market adjustment. Influenced by the market's habitual thinking, it cannot be ruled out that there is still room for adjustment in the future market.
Demand has turned from strong to weak
Market frontline information shows that on April 22nd, the auction transaction price of high-temperature coal tar of Anhui Huaibei Linhuan Coking Co., Ltd. reached 3,322 yuan, and the final auction transaction price of high-temperature coal tar of Shougang Shuicheng Iron and Steel (Group) Co., Ltd. was implemented at 2,750 yuan. The transaction price in the southwest region dropped to 2,750 yuan to 2,800 yuan, and the transaction prices in various regions continued to set new highs.
Shao Huiwen said that the main reason for the consecutive new lows in coal tar prices is the weakening of demand. As the peak season of "Golden March and Silver April" is coming to an end, downstream consumption is gradually entering the off-season. Since April, the digestion of domestic tire inventories has been slightly slow. Industry players are pessimistic about the future price of coal tar and have shown weak purchasing enthusiasm, buying as needed. From the terminal market, it can be seen that the terminal demand for the entire coal tar industry is weak and difficult to change in the short term, which has led to the continuous decline in the prices of carbon black and anthracene oil, and the intensified loss situation of carbon black enterprises, resulting in a continuous reduction in their burden. Meanwhile, the support provided by the electrolytic aluminum industry to the coal tar pitch market has come to an end, which will impede the sales of products by deep processing enterprises. Under the heavy pressure of losses, the deep processing industry will resist high-priced raw materials. Shao Huiwen predicts that the downward adjustment trend in the coal tar market is expected to continue until May. However, as the market has already undergone a significant adjustment in April and risks have been fully released, the adjustment range in the future market may narrow.
Supply is expected to increase
According to the statistics of Longzhong Information, as of April 17th, the comprehensive capacity utilization rate of domestic independent coke enterprises was 73.51%, an increase of about 5% compared with the previous period. The operating rate of coke enterprises has maintained a steady upward trend since mid-March, and the output of coal tar has also grown steadily.
The person in charge of Pingmei's No. 1 coking enterprise introduced that with the implementation of the first round of coke price hikes, the profits of coking plants have somewhat recovered. Moreover, from the perspective of steel mills, the current profitability of steel mills is still acceptable, and the output of molten iron remains at a high level, resulting in a strong demand for coke procurement. The steady increase in the operating rate of domestic coking enterprises is unlikely to change in the short term, and there is still an expectation of growth in coal tar output. In addition, under the current market's numerous uncertainties, all enterprises are reluctant to increase their coal tar inventories and basically adopt a strategy of selling as they produce. Especially, the low-price inventory reduction sales policies of some enterprises will accelerate the market adjustment, and high-price transactions in the market will become fewer and fewer.
Downstream enterprises accumulate inventory
According to Meng Jianjie, the marketing manager of Zhengzhou Dayou Gas, under the circumstances of sluggish terminal demand, small oils such as anthracene oil and washing oil, which are deep-processed products of coal tar, have experienced overstocking, and the inventories of deep-processing enterprises have increased. Only coal tar pitch has been supported by the low operating rate of the industry, and the market remains relatively stable. The price range of carbon black has been on a downward trend, and the follow-up volume of new orders in the market is average, with limited trading volume within the market. Inventory has increased significantly. Although the operating rate of deep processing of coal tar rose to 46% on April 17th, due to the intensification of losses, the operating rate of the carbon black industry was 61.79%, a decrease of 2.52% compared with last week. Therefore, against the backdrop of sluggish terminal demand, the inventory of a series of products in the deep processing industrial chain of coal tar has only increased and not decreased. In the short term, the demand for coal tar is also unlikely to improve.
Moreover, the recent sharp and accelerated decline in the coal tar market has led traders to adopt a wait-and-see attitude or even exit the market, which is bound to have a negative impact on the coal tar market that is about to enter the off-season for consumption.
Industry insiders analyze that, given the current weak downstream market and the weak intention of coke enterprises and traders to stockpile, it is unlikely that deep processing enterprises of coal tar will significantly increase their operating rates in the short term. Against the backdrop of ongoing international trade disputes, many uncertainties still exist in the terminal market, and the adjustment trend of the coal tar market is likely to continue. However, as the significant market decline in April has largely released the risks of the previous rise, it is expected that May may become a key adjustment point, and the coal tar market is likely to bottom out and stabilize.