On September 1, a significant development took place in the Chinese coal chemical industry as 18 tar processing companies, led by Shanghai Baosteel Chemical Co., Ltd., issued the “Declaration on China Coal Chemical Industry Development†in Beijing. The declaration aimed to address long-standing issues within the sector, including the inefficient growth model of coal chemical enterprises and the wasteful use of resources. More importantly, it sought to transform the fragmented and small-scale nature of tar processing companies into a more organized and integrated industry complex.
One of the most notable outcomes of this initiative was a sharp increase in tar prices. Since August, the market has experienced significant volatility. In major tar-producing regions like Shanxi, prices have surged dramatically. For instance, some companies in Taiyuan quoted tar at RMB 1,000 to 1,100 per tonne, while the ex-factory price of tar in Linyi District rose by 64.17% compared to April. In East China, tar prices reached as high as RMB 1,700 per tonne, with many users forced to pay upon delivery.
According to Huang Jianguo, Deputy General Manager of Shanghai Baosteel Chemical Co., Ltd., several factors contributed to this price surge. First, macro-control policies introduced by the government to curb the steel and coke industries led to reduced production and even shutdowns, resulting in lower tar output. Second, rising international crude oil prices pushed up the cost of heavy oil, prompting many industrial users to switch to tar as a cheaper alternative, thereby shifting the supply-demand balance in favor of tar. Additionally, Guangdong’s high demand for fuel oil made it more attractive for suppliers, causing shortages in other regions.
Shanxi-based tar processing companies also observed similar trends. According to an official from Shanxi Hongte Coal Chemical Co., Ltd., coking companies in Shanxi significantly cut production since late June, leading to a sharp decline in tar supply. Meanwhile, tar processing companies operated at higher rates, exacerbating the shortage. Moreover, new projects such as the 300,000-ton-per-year facility by Shanxi Coking Group and the 160,000-ton-per-year project by Linyi Jinhuan Coking Company increased demand, pushing up local prices to record highs in Shanxi.
Despite the rising tar prices, downstream products like asphalt saw a steep decline in value. Asphalt, which accounts for 55% of tar demand, fell sharply, with average prices dropping below 400 yuan per ton—more than a 50% drop from the start of the year. This imbalance left many tar processing companies struggling, with some facing losses and others forced to halt operations.
Faced with these challenges, 18 leading tar processing companies gathered in Beijing to call for unity, stable markets, and fair pricing. They emphasized the need for collaboration to regain control over market dynamics. Huang Jianguo noted that while collective action is essential, it will take time to establish a cohesive system.
Coal chemical expert Xu Guangcheng predicted that the next 1–2 years will see fierce competition in the tar processing industry, ultimately leading to consolidation. Small-scale companies are likely to be eliminated, paving the way for centralized, large-scale operations. This shift, he said, is an inevitable step toward a more efficient and sustainable industry.
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