Lead: With concentrated replenishment of rigid demand from downstream buyers, domestic phthalic anhydride (PA) inventories have shifted to an oversold position, and the oversold inventory cycle for naphthalene-based PA has extended.
Cost Push Drives Broader PA Market Gains
Specifically, during this period, the market price of ortho-xylene-based PA in Jiangsu rose, with prices fluctuating in the range of RMB 9,000–9,250 per ton. In Hebei, naphthalene-based PA market prices gained by a larger margin, with prices ranging from RMB 7,900 to 8,200 per ton. Over this cycle, domestic PA market prices advanced, with cost-side factors being the primary driver of the rebound. Higher international crude oil prices lifted commodity futures and fostered a strong speculative atmosphere, prompting downstream buyers to follow up with rigid-demand purchases. Trading volumes in the domestic PA market expanded accordingly. Oversold inventories in the ortho-xylene-based PA segment, along with a further extension of the oversold inventory cycle in naphthalene-based PA, became key factors supporting the upward move. During the week, strong cost support from the upstream aromatics chain pushed domestic ortho-xylene prices higher, raising costs for the ortho-xylene-based PA industry. Meanwhile, industrial naphthalene supply tightened, with further price increases expected. Robust cost-side momentum, combined with low industry inventories, drove domestic PA market prices to continue rebounding.
Main Downstream Demand and Consumption Growth
The PA supply-demand balance in this period remained in a pattern of supply exceeding demand, but the supply-demand gap narrowed, boosting market sentiment. Although PA supply changed little, demand showed growth, providing support for prices. During the week, capacity utilization of the major downstream sectors increased from the previous period: DOP operating rates rose, DBP operating rates rose, and UPR operating rates rose. China's unsaturated polyester resin (UPR) operating rate stood at 33% for the week, with overall capacity utilization recovering slightly from the prior cycle. Production at UPR plants generally trended upward. Specifically, one unit in Henan resumed operation, one unit in Zhejiang was restarted, one unit in Shandong raised its operating load, and two units in Changzhou simultaneously increased loads, driving overall output growth and improving the market supply pattern. In the next period, considering recent maintenance and restart activities, capacity utilization is expected to rise in the PA downstream sectors: UPR, DOP, and DBP.
Table 1 Domestic Supply-Demand Balance (Unit: 10,000 tons)
| Data Type | Item | Current Period | Prior Period | Change | Next-Period Trend |
|---|---|---|---|---|---|
| Supply | Ortho-xylene-based PA output | 1.7 | 1.63 | 0.07 | ↗ |
| Naphthalene-based PA output | 2.32 | 2.35 | -0.03 | ↗ | |
| Total PA output | 4.02 | 3.98 | 0.04 | ↗ | |
| Demand | Domestic consumption | 3.8 | 3.5 | 0.3 | ↗ |
| Export volume (E) | 0.2 | 0.3 | -0.1 | ↓ | |
| Total demand | 4 | 3.8 | 0.2 | ↗ | |
| Supply-demand gap | Weekly theoretical balance gap | 0.02 | 0.18 | -0.16 | Absolute value increasing |
This period, PA supply increased slightly; the operating rate for ortho-xylene-based PA rose modestly, while that for naphthalene-based PA declined, but overall industry output edged up and capacity utilization increased slightly. Imports accounted for a negligible share, so weekly total supply no longer includes an import assessment and is based only on PA output. On the demand side, DOP consumption increased, DBP consumption increased, UPR consumption increased, and exports declined slightly; overall consumption was assessed as growing. The supply-demand balance still showed supply exceeding demand, but the gap narrowed from the previous week. The supply-demand balance over the period was in line with prior expectations, and the supply-demand data lent some support to the market. Downstream buyers carried out concentrated replenishment of rigid demand and were relatively active in taking deliveries.
Next period, the PA production-sales supply-demand gap is expected to widen. However, with cost-side upward expectations, stronger cost-driven momentum, and generally oversold industry inventories, market prices may continue to move higher. Key points to watch: 1. Supply side. Overall operating rates in the PA industry are expected to rise next period, easing supply tightness to a certain extent and increasing market supply pressure. 2. Demand side. Operating rates in the major downstream plasticizer industry are expected to increase, with overall consumption anticipated to grow. 3. Cost side. Raw material ortho-xylene costs are expected to rise, and cost support for the ortho-xylene-based PA segment remains strong. Industrial naphthalene prices are expected to move higher, pointing to stronger cost support for naphthalene-based PA.
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