Lead: Following the rapid decline in domestic phthalic anhydride (PA) market prices, spot supply tightness in the naphthalene-process PA sector persisted. Driven by concentrated downstream restocking and disruptions in the Strait of Hormuz region, domestic PA prices rebounded sharply.
Concentrated Downstream Restocking Halts PA Market Decline and Triggers Rebound
Specifically, during this period, the price of ortho-xylene (OX)-process PA in Jiangsu first fell and then rose, fluctuating in a range of 7,600-7,900 yuan/ton. The price of naphthalene-process PA in Hebei also fell before rising, with a fluctuation range of 6,900-7,300 yuan/ton. During this cycle, domestic PA market prices dropped initially and then rebounded, with cost factors being the main driver of the decline. Supporting of OX feedstock prices dragged down support from the cost side of the OX-process PA industry, putting downward pressure on market prices. However, with the continuous decline in recent PA market prices, downstream industries maintained low feedstock inventories. Combined with the surge in export orders for naphthalene-process PA, the supply tightness of naphthalene-process PA intensified. The naphthalene-process PA market took the lead in bottoming out and rebounding, narrowing the price spread between OX-process and naphthalene-process PA. During the week, influenced by geopolitical tensions in the Middle East, crude oil prices surged, greatly boosting market sentiment. This led to increased overall transaction volumes in the domestic PA market, driving across-the-board price recovery.
OX Feedstock Capacity Utilization Hits New Low, Strengthening Market Support
Since late June, due to plant shutdowns at Fuhai Chuang (240,000 tons/year), Hainan Refining & Chemical (200,000 tons/year), and Hongrun Technology (50,000 tons/year), the capacity utilization rate of the domestic OX industry has been declining. Currently, the capacity utilization rate of the domestic OX industry has dropped to around 45%, a decrease of about 15% from June, hitting a historic low in recent years. This has exacerbated the supply shortage. Domestic OX spot supply is nearly nonexistent, reflecting strong supply control. After the OX price cut was implemented this week, domestic OX prices have fully adjusted and hit bottom. Supported by improving export demand, the domestic OX market has entered a state of extreme scarcity. With the OX price cut fully absorbed, bearish factors have been largely priced in, marking a key signal of a market bottom.
Low PA Supply but Positive Demand Outlook
Affected by the historically low capacity utilization rate of OX feedstock, the supply of OX is insufficient, leading to a persistent decline in the capacity utilization rate of the OX-process PA industry, which has fallen to around 44%—also a multi-year low. The production reduction from OX-process PA is significant, and the sector has entered a continuous destocking phase. Combined with the maintenance shutdown of the Gulei Chemical PA plant, OX-process PA supply in South China has tightened, becoming a supporting factor for the market. For the naphthalene-process PA sector, temporary shutdowns have increased, pushing its capacity utilization rate downward as well, further tightening spot supply. In terms of the main downstream plasticizer industry, with recent low feedstock prices, the profitability of the downstream plasticizer sector has improved, boosting operating rates. The capacity utilization of the major downstream segments—DOP and DBP—is expected to rise further, providing stronger support from the plasticizer demand side.
Outlook: Narrower Supply-Demand Gap, Upward Price Pressure
In the coming period, the supply-demand balance for PA is expected to narrow slightly. With low inventory levels across the domestic PA industry, producers have a strong incentive to push prices higher, and the center of gravity of domestic PA market prices is expected to move upward. Key points to watch: 1. Supply. Overall PA operating rates are expected to increase slightly in the next period, but they remain at low levels, limiting supply pressure. 2. Demand. The operating rate of the main downstream plasticizer sector is expected to rise significantly, and some export orders are still unfolding, supporting growth in overall consumption. 3. Cost. The cost of OX-process PA is expected to remain stable, maintaining a strong cost environment for OX-based PA. Meanwhile, the price of industrial naphthalene is expected to rise, raising cost pressure for naphthalene-process PA.
Comments
0