Tar Cost Carbon Black Rally
On the cost side: The domestic high-temperature coal tar market continued its overall upward trend, but with some regional differences. Due to a significant price increase in Shandong last week, the upward momentum in that region slowed temporarily this week, with Laiwu Steel's auction prices showing a slight decline. Other regions maintained their upward trend, with Hebei province leading the gains this week, ultimately achieving a high price level nationwide.
Although the domestic high-temperature coal tar price rose significantly last week, the smooth increase of 300 yuan/ton in coal tar pitch allowed deep-processing enterprises to maintain a certain profit margin, resulting in high operating rates. New orders for carbon black also saw a slight increase, with operating rates also remaining high.
Therefore, positive factors continued to dominate the coal tar market, driving prices higher this week. The short-term outlook for the coal tar pitch market remains strong, suggesting that the upward trend in the coal tar market is likely to continue.
The Shandong anthracene oil spot market saw limited upward momentum, with end-user participation being relatively passive, and transactions remaining stagnant. On the raw material side, the price increase of high-temperature coal tar in Shandong was limited, while prices in Shanxi had room for further increases, showing an overall upward trend.
This provided unilateral support to the anthracene oil market. On the supply side, the operating rate has slightly rebounded, remaining at a medium-to-high level overall, with supply at a high level. In the downstream market, new orders for carbon black show a continued intention to raise prices, but the downstream tire market has strong downward pressure on prices, limiting the actual upward potential of new carbon black orders.
Therefore, the strategy for purchasing anthracene oil remains to buy on dips. The anthracene oil hydrogenation market is generally weak, with reduced demand. Overall, the anthracene oil market only benefits from cost-side advantages, and the room for further price increases is narrowing.
Downstream Demand: The operating rate of semi-steel tires in China is 69%. The operating rate of all-steel tires in China is 62%. This week, the tire operating rate declined. Some sample companies in both all-steel and semi-steel tire sectors experienced maintenance shutdowns during the cycle, dragging down the operating rate. The main reasons for the maintenance were insufficient overall orders and slowed shipments. Additionally, some sample companies underwent equipment upgrades, affecting overall capacity release.
Operating Rates and Profitability: Carbon black plant operating rates saw a slight increase. Plants in Shandong and Shanxi provinces, having completed maintenance, gradually increased their operating rates. Operating rates in northern regions remained high, while the southern market maintained a low level. Overall, carbon black plant operating rates showed a slight increase.
In Shandong, the theoretical profit for N330 carbon black plants was approximately -556 yuan/ton, an increase of 148 yuan/ton compared to the previous period. Taking Shandong as an example, the price of raw material coal tar retreated from its high level, falling by 30 yuan/ton, while carbon black market quotations rose. However, the actual implementation of these price increases was slow, resulting in significant pressure on the carbon black market. Theoretically, the loss-making area in the carbon black market narrowed.
In summary: Except for a slight decrease in Shandong, the price of raw material coal tar rose in other regions, indicating a favorable cost environment. This provided strong support for downstream coal tar pitch, but demand for carbon black remained weak. Low-priced tire orders were largely completed, with further negotiations expected at the end of the month or beginning of the next. Therefore, there was a lull in the market, with only small-scale restocking orders.
Following the price increase, some industry players adopted a wait-and-see approach, resulting in moderate trading activity. However, supported by cost factors, new orders in the carbon black market were negotiated at firm prices.
Looking ahead, coal tar prices in Shandong are expected to follow suit, further driving up costs. Furthermore, with large downstream orders expected to be finalized at the end of the month, the carbon black market is expected to maintain a firm price trend in the short term, with quoted prices continuing to rise.
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