Looking at the trend chart of coal tar ex factory prices in Shanxi Province in 2023, it can be seen that the average ex factory price at the beginning of 2023 was 6155 yuan/ton, and at the end of the year, the price was 4237.5 yuan/ton, a year-on-year decrease of 31.15%. The highest point of the year occurred on January 1st at 6155 yuan/ton, and the lowest point of the year occurred on May 11th at 2652.5 yuan/ton, with a maximum amplitude of 56.9%. The overall trend of the coal tar market in 2023 was volatile and downward, with a wide range of fluctuations in the first half of the year after a decline. The range fluctuates in the second half of the year.
According to the Commodity Market Analysis System of Shengyishe, the coal tar market in 2023 saw more declines and less gains, with a total of 5 months of gains and 7 months of declines. The month with the highest increase was May, which saw a 32% increase, while the month with the highest decrease was April, which saw a 36.91% decrease.
Phase 1: In the first half of the year, it first fell and then rose
In January, the supply of tar remained relatively stable, while the deep processing industry experienced a significant decline. Among them, anthracene oil fell by 1350 yuan/ton, coal tar asphalt fell by 1500 yuan/ton, and the prices of other commodities also fell by nearly a thousand yuan. Under the mentality of suppressing deep processing, the auction price of tar has significantly declined, with the last auction price before the holiday falling by over a thousand yuan in a single transaction, a monthly drop of 19.37%.
In February, it rose by 13%, and the prices of major commodities in the downstream deep processing industry steadily increased, especially coal tar and anthracene oil prices. The deep processing industry has good profits and is actively operating, with a good acceptance of tar price increases. As the price of raw material tar continues to rise, downstream profits have significantly declined, and by the end of the month, resistance towards high priced raw materials has begun to emerge.
From March to mid May, tar prices continued to decline, with a cumulative decline of 52.7%. During this cycle, the overall production of coking enterprises has been relatively high, and the supply of tar has remained stable with a slight increase. At the same time, the downstream deep processing industry has been experiencing continuous decline, with a strong attitude towards suppressing raw material tar. There have also been many cases of enterprise auctions. In order to digest inventory, coking enterprises have been forced to sell at lower prices, resulting in a continuous decline in the coal tar market under the weak supply-demand pattern.
In June, prices rose first and then fell. After entering June, coking enterprises started to rise first and then fall. The supply of tar was slightly tight. After two and a half months of decline in the early stage, tar prices dropped to a low level, and coking enterprises had a strong attitude of price support. Under the mentality of supply and demand game, the tar market ushered in a wave of recovery. However, during the same period, downstream demand did not show a significant improvement, and the lack of demand support made it difficult to maintain the upward trend, leading to a brief pullback in late June.
Phase 2: In the second half of the year, the range fluctuates and the overall price rises first and then falls
During this cycle, the price of coal tar has maintained a fluctuating trend, with an overall fluctuation range of 4250-5200 yuan/ton, with a decline of 0.29% within six months. According to the trend, the National Day holiday is basically used as the dividing point, with the first half of the cycle oscillating upwards and the second half oscillating downwards.
From July to mid October, it fell first and then rose, with a cumulative increase of 17.41%. In early July, during the coke steel game, the demand in the deep processing industry was poor, making it difficult to bear high prices of tar. Under the pressure of downstream pressure, prices slightly declined. From August to September, downstream carbon black prices significantly increased, and the profitability of the deep processing industry improved significantly, driving raw material prices into a new upward trend. Driven by terminal demand, tar prices remained high and volatile.
After entering October, the prices of domestic deep processing related commodities have generally decreased, with weak demand support. The sales of major commodities such as carbon black have been poor, and some coal tar enterprises have experienced auction failures, further leading to a decline in market sentiment. By the end of the peak season in November, the carbon black market had entered a rapid downward trend, with a market decline of over a thousand yuan, falling by 9.61% in November. In November, the coal tar market underwent 5 rounds of overall auctions, with a total of 4 rounds of decline and one round of slight increase. Although coal tar supply was slightly tight within the month, auction prices continued to decline without downstream support. December basically continued the trend of November, mainly due to the poor performance of downstream carbon black and coal tar pitch markets, losses in the deep processing industry, suppression of raw materials, and the occurrence of auctions in many places, resulting in overall weak market sentiment.
Looking ahead to 2024:
From the review of the trend in 2023, it can be seen that the main factors affecting the auction price of coal tar are supply and demand. Due to the fact that coal tar is produced along with coke during the coal dry distillation process, the main production enterprises are coking enterprises. As one of the important raw materials in steel production, coke has a relatively stable operating rate overall, especially when dealing with production reduction. Therefore, the operating rate of coking enterprises in 2023 is basically fluctuating between 70% and 80%, and the supply of corresponding coal tar is mostly stable. Overall, the current trend of the downstream deep processing industry has a greater impact on the tar market. The coal tar deep processing industry is the main application field of high-temperature coal tar, and the main commodities obtained from deep processing include naphthalene, anthracene oil, wash oil, coal tar pitch, carbon black, etc. So what will happen to the coal tar market in the future? From the perspectives of supply and demand:
Supply: The operating rate of coking enterprises is relatively stable, and there is little change in the supply of tar
Supply: High temperature coal tar is one of the main by-products in the coke production process, and monitoring coke production can provide a better understanding of the production situation of coal tar. At present, the operating situation of coking enterprises is less affected by external factors, and the correlation between actual coke production and production capacity is relatively low. The operating rate mainly fluctuates with the profitability of coking enterprises themselves. From the above chart of changes in operating rates of coke enterprises from 2022 to present, it can be intuitively felt that coke enterprises are still adjusting their operating rates very frequently, but overall, they are still adjusting within the range of 70% -80%, and the magnitude will not be too large, especially when dealing with production reduction with caution. From the comparison chart of coke production over the years, it can also be seen that the overall coke production in 2023 is relatively stable, with little difference between different months. Mainly because steel mills have been actively increasing production in the past 23 years, the demand for coke has been relatively stable. Therefore, the current production situation of coke mainly depends on the demand of downstream steel mills, and the actual production of coke is closely related to the operation of blast furnaces in steel mills. According to the latest data from the National Bureau of Statistics, the coke production in 2023 was 492.6 million tons, a year-on-year increase of 3.6%. Currently, the overall supply of coke is relatively stable, and it is expected that the supply of coke will also be relatively stable in 24 years without obvious external factors. It can be inferred that the overall supply of coal tar in 24 years will also be relatively stable, and some months’ production will fluctuate with the peak season, but the amplitude is limited.
Demand: The terminal demand in the deep processing industry is expected to be good, and demand support still exists
Demand: From the above table, it can be seen that the prices of related commodities in the deep processing industry have significantly declined in 2023, with coal tar having the largest annual decline of 3200 yuan/ton. The weak performance of downstream products is also the main factor for the significant decline in coal tar prices in 2023. The terminal demand for major downstream products in deep processing is basically implemented in the infrastructure and automotive industries. In 2023, the production and sales of automobiles reached a new high, and the domestic economy was operating steadily. Market participants generally believe that the production and sales boom of the tire industry in 2024 will continue, and the demand for carbon black may improve. The prospects of the coal tar pitch market in 2024 will also be relatively optimistic, with continuous expansion of the demand side and the possibility of stable price growth. From the perspective of terminal demand, there is still demand support in 2024.
In the future, Business Society believes that the overall supply of tar will remain stable with a slight increase in 2024, and there is some positive demand side. It is expected that high-temperature coal tar will have some upward space in the next 24 years, and the specific market trend will mainly follow the fluctuations in profits of downstream deep processing industries and the impact of demand during the off peak season. In the short term, there is some upward space due to the boost of pre holiday stocking demand.
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