The dual benefits of supply and demand in February 2024 support a rise in tar prices

According to the commodity market analysis system of Shengyishe, the coal tar market in Shanxi Province was temporarily stable at the beginning of the month in February 2024, with a significant increase after the holiday. The price at the beginning of the month was 4360 yuan/ton, and the price at the end of the month was 4730 yuan/ton, with a monthly increase of 8.49%.


Gamma-PGA (gamma polyglutamic acid)

From the monthly K-bar chart of coal tar, it can be seen that after entering 2023, the coal tar market has experienced more decline and less increase, with significant increases and decreases from January to May, and relatively small fluctuations in June and July. On a monthly basis, the market saw a broad decline of 19.37% in January, followed by a brief 13% rebound in February. In March, prices fell sharply again by 15.2%, and in April, the decline continued to expand to 36.91%. In May, the market rebounded significantly by 32%. The market performance in June and July was relatively stable, but after entering August, the market fluctuated greatly, with overall gains and losses. The market maintained a narrow range of fluctuations from September to October, with a broad decline in November.


Note: The K-bar chart of commodity prices uses the concept of price trend candlestick to reflect weekly or monthly price fluctuations in the form of a bar chart. Investors can buy and sell based on the changes in the K-bar chart. Red indicates an increase; Green indicates a decline; The height of the K-bar represents the range of fluctuations.


On February 29th, the coal tar (high-temperature) commodity index was 163.10, an increase of 10.34 points from yesterday, a decrease of 29.54% from the highest point in the cycle of 231.47 points (2022-11-09), and an increase of 245.92% from the lowest point of 47.15 points on December 6th, 2015. (Note: The cycle refers to 2011-09-01 present).


Most coking enterprises conducted the final round of auctions before and after January 30th, and most companies signed contracts for three weeks. Therefore, the coal tar market maintained a temporary stable operation in mid to early February, until the latest round of auctions after the year began around the 20th in various regions. With tight supply and downstream replenishment demand boosting, auction prices rose. At the end of the month auction, boosted by the dual benefits of supply and demand, the price at the end of the month has significantly increased again, with an adjustment range of 100-400 yuan/ton.


From 2022 to present, we can see from the operating rate curve of independent coking enterprises in China that after entering 24 years, the operating rate of coking enterprises has significantly declined. After the holiday, the fourth round of increase in prices of coking enterprises has quickly landed, and coking enterprises have generally suffered losses. There has been a significant increase in active production restriction enterprises, and the comprehensive operating rate has slid to below 70%. The supply of coal tar is tight, and the supply side is favorable. Moreover, due to the impact of losses on coking enterprises recently, it is difficult for them to increase their operating rates in the short term, and the tight supply situation in the tar market will continue for a period of time.


From the price table of the deep processing industry we monitored in February, it can be seen that the overall performance of the deep processing market has significantly improved since February, with prices of related commodities rising, especially the prices of major commodities such as carbon black and coal tar pitch, which have significantly increased, driving the market to heat up. Downstream enterprises also generally have a demand for replenishment after the holiday, actively entering the market for inquiries and procurement. With the boost of replenishment demand, the demand side will continue to be positive for a period of time.

Overall, the tight supply pattern in the coal tar market will continue for a period of time, with strong support from the demand side under the influence of two important commodities, carbon black and coal tar pitch. Driven by the dual benefits of supply and demand, it is expected that the coal tar market will continue to maintain a strong performance in the near future.