Lead: Recently, Sinopec's main ethylene tar prices have remained firm, with the East China market holding steady at the 3,300 yuan/ton mark for 14 consecutive days, breaking the previous weak consolidation pattern. This week, sentiment in the main market has improved, and prices have risen as expected. Against this backdrop, how are related products performing?

I. Crude Oil Situation: International Oil Prices Have Recently Fell from Highs; If US-Iran Negotiations Go Smoothly, There Is Greater Risk of a Further Decline

On May 28, although there were still low-intensity conflicts and frictions between the US and Iran, reports suggested that a negotiation agreement had been largely finalized, leading to mixed international oil price movements. The NYMEX crude oil futures contract for July settled at $88.90, up $0.22/barrel, a sequential increase of +0.25%. The ICE Brent crude oil futures contract for July settled at $93.71, down $0.58/barrel, a sequential decrease of -0.62%. China's INE crude oil futures contract for July closed down 10.7 yuan at 594.2 yuan/barrel, with the night session down another 3.6 yuan to 590.6 yuan/barrel. Although there are still low-intensity conflicts and frictions between the US and Iran recently, the negotiation process between the two sides is still progressing. The market believes the outlook for the US-Iran situation remains relatively optimistic. Recently, international crude oil prices have shown clear signs of decline, and future trends are attracting significant attention.

It can be seen that this conflict has impacted both the supply and demand sides of crude oil. The supply gap widened significantly in March and further expanded in April-May. Currently, there is still no sign of improvement, and the market needs to observe the progress of US-Iran negotiations and the improvement of navigation conditions in the Strait of Hormuz. The market generally holds an optimistic view on the prospects of US-Iran negotiations. Iran has also indicated that the possibility of a full-scale resumption of war between the US and Iran is low. The US-Iran situation is expected to reach a turning point in June. If this assumption holds, geopolitical risks will diminish, and international oil prices will face new downside risks.

II. Market Reactions of Homogeneous Products

This period, the domestic high-temperature coal tar market has risen significantly. Recently, downstream sectors, whether deep processing or carbon black, have maintained high operating rates, leading to strong demand for coal tar. Meanwhile, due to the rapid decline in inventories earlier, coking plants currently have no inventory pressure, and the supply of coal tar in the market is tightening. Additionally, deep processing enterprises still have some profit margins. Auction prices for new orders of downstream products have mainly increased, with industrial naphthalene seeing a particularly large price hike. The quoted prices for new carbon black orders have also risen substantially, reducing losses for carbon black enterprises. Therefore, positive factors in the market are continuously accumulating. Although the coal mine accident in Shanxi on Saturday has not yet had a significant actual impact, market expectations of reduced coal tar supply have stimulated downstream buying sentiment. As a result, prices have risen significantly this week, and the coal tar market is expected to maintain its upward trend in the short term.

The high-temperature coal tar market is expected to have further upside potential in the next period. Key points to watch: 1. Supply side. Due to rising coking coal prices and the coal mine incident, coking plant operating rates are expected to decline slightly, leading to an expected decrease in high-temperature coal tar production. 2. Demand side. The recent high operating rates downstream have created strong demand for coal tar. 3. Sentiment side. Driven by the market mentality of buying on rising prices rather than falling ones, downstream factories are showing strong buying interest, and trader activity has increased. 4. Inventory side. Most coking plants have no inventory pressure, and market supply is tight.

During the week, the tender prices for raw material coal tar rose substantially. Driven by increased costs for coal tar, new order quoted prices for carbon black in the region rose successively, with actual transactions still under negotiation. Although it is currently the negotiation period for new tire procurement orders downstream, downstream players show evident resistance to high prices and have limited capacity to accept such a broad price increase, making it difficult for new orders to materialize in the market. Overall, after the increase in raw material market prices, downstream buyers are cautious, but supported by firm pricing for new orders, new order prices are expected to continue their upward trend.

As of now, crude oil prices have mostly trended downward, with bearish sentiment dominating the information front. Market participants in the oil slurry market are adopting a wait-and-see attitude, and pricing benchmarks are being adjusted downward in line with market conditions. Downstream merchants are mainly purchasing small quantities to meet immediate needs, lacking confidence in future transactions. Refinery sales are sluggish, and negotiated prices have narrowed downward. Average prices have shown a decline compared to the previous week. Residue oil cost support is unstable. Under the influence of bearish information and cost factors, refineries have lowered their negotiated prices for sales this cycle. Downstream processing margins are low, leading to cautious purchasing sentiment focused on immediate needs. Market buying sentiment is lukewarm, which hinders the support for residue oil price firmness. However, maintenance at some major refineries in certain regions has led to a tightening of residue oil supply in those areas, somewhat mitigating the overall downward trend in residue oil prices. This cycle, some units producing wax oil have undergone new maintenance shutdowns. The decline in wax oil supply exceeds the decline in demand. Refineries are reluctant to sell at low prices for their available volumes. The negotiation focus for wax oil remains temporarily stable and stagnant, with only a few high-end prices experiencing narrow downward adjustments within the range.

This period, synthetic graphite prices remained stable, mainly executing contract orders. High-end power graphite prices are between 32,000 and 36,500 yuan/ton. High-end digital graphite prices range from 45,500 to 65,000 yuan/ton. Mid-end product prices are between 26,000 and 34,500 yuan/ton. Low-end product prices range from 20,000 to 25,500 yuan/ton. The prices of raw and auxiliary materials used in synthetic graphite have begun to decline, which is beneficial for reducing cost pressures in anode production. The supply-demand situation for anode materials is broadly stable, with downstream demand increasing steadily and overseas energy storage orders being robust. On the needle coke supply side, raw material sources in the market remain tight. The supply of low-sulfur oil slurry is constrained, making procurement difficult. On the demand side, there is positive support for anode material demand. Demand for calcined coke from graphite electrodes is weak, and purchasing sentiment is cautious.

III. Summary

International crude oil prices fell this week, currently hovering around $90/barrel. Meanwhile, the quoted price for ethylene tar in East China is 3,400 yuan/ton. This price level corresponds to a previous crude oil price range of $60-70/barrel, indicating that the short-term impact of the crude oil decline on ethylene tar prices is limited.

According to research by chempricehub, Yangzi Petrochemical's ethylene tar unit has entered a maintenance phase. Sinopec-SK (Wuhan) Petrochemical, Shenghong Petrochemical, and Hainan Refining & Chemical have also scheduled unit maintenance. Gulei Petrochemical has not yet resumed production. Maoming Petrochemical and Jieyang Petrochemical plan to switch their products for captive use in June. The overall future supply is expected to decrease. Coupled with the price increases of high-temperature coal tar and carbon black, which have boosted confidence in ethylene tar, it is expected that ethylene tar prices will continue to be pushed higher next week.