Introduction: Recently, demand-side factors have become the primary driver of the market. Under the negative feedback loop from downstream demand, the market price of phthalic anhydride has been trending down, and the price spread between ortho-xylene (OX)-based and naphthalene-based phthalic anhydride has widened again.

Negative Demand Feedback Drives Down Phthalic Anhydride Market Prices

Specifically, during this period, the market price of OX-based phthalic anhydride in Jiangsu fell, with the price fluctuation range between 8,800-9,100 yuan/ton. The market price of naphthalene-based phthalic anhydride in Hebei fluctuated between 7,500-7,800 yuan/ton. During this cycle, domestic phthalic anhydride market prices declined, with demand-side factors continuing to be the dominant market driver. Persistently sluggish end-user demand constrained rigid market follow-up purchases. Meanwhile, under high operating rates in the domestic phthalic anhydride industry, the OX-based segment faces inventory accumulation pressure. Although the naphthalene-based segment generally has oversold inventories, its high spot profit margins have led companies to prioritize locking in profits. Consequently, prices for distant-delivery naphthalene-based phthalic anhydride dropped significantly, further fueling bearish market sentiment and increasing sales resistance.

[Image: Figure 1: Domestic Phthalic Anhydride Market Price Trend (Unit: yuan/ton)]
[Image: Figure 2: Weekly Price Trend Comparison for Phthalic Anhydride: East China vs. Hebei (Unit: yuan/ton)]
Data Source: chempricehub

Phthalic Anhydride Industry Chain Profits Concentrated Upstream

During this period, industry chain profits have concentrated upstream, leading to a divergence in profitability across the chain. The average weekly comprehensive profit for ortho-xylene was 1,840 yuan/ton, up 780 yuan/ton from the previous period, an increase of 73.58%. The profit for OX-based phthalic anhydride was -330 yuan/ton, down 108 yuan/ton from the previous period, a decline of 48.65%. The profit for naphthalene-based phthalic anhydride was 1,288 yuan/ton, down 110 yuan/ton from the previous period, a decline of 7.87%. This resulted in increased profitability for upstream ortho-xylene, a widened loss for OX-based phthalic anhydride, and a decline in profitability for naphthalene-based phthalic anhydride. Among downstream products, DOP profitability decreased, while UPR profitability expanded. The recent drop in phthalic anhydride prices has eased cost pressures for downstream users, but as downstream markets are also declining, profit levels across these sectors vary significantly.

[Image: Figure 3: Phthalic Anhydride Industry Chain Profit Trend (Unit: yuan/ton)]
[Image: Figure 4: Domestic Operating Rate Trend for Key Downstream Phthalic Anhydride Sectors]
Data Source: chempricehub

Supply Growth Expected for Phthalic Anhydride, But Demand Outlook Weakens

During this period, phthalic anhydride supply decreased. OX-based production increased, while naphthalene-based operating rates fell, leading to a slight decline in overall industry output and capacity utilization. As import volumes are negligible, weekly total supply is now assessed based solely on domestic production, excluding imports. On the consumption side, consumption from DOP, DBP, and UPR all declined, while exports remained stable. Overall consumption is assessed to have decreased, resulting in a supply surplus, with the supply-demand balance gap widening compared to the previous week. The supply-demand balance during the period aligned with prior expectations. These supply-demand dynamics put downward pressure on the market. With declining downstream demand consumption, new orders met resistance, hindering transaction follow-through. Looking ahead to the next period, as more plants resume operations than previously expected to shut down, supply is projected to increase. Conversely, downstream unit operating rates are expected to decline, creating a theoretical scenario where supply exceeds demand. The absolute value of the supply-demand balance gap is likely to widen, further constraining prices.

It is expected that the supply-demand gap for phthalic anhydride will continue to widen in the next period. Although raw material ortho-xylene supply remains tight, inventories of OX-based phthalic anhydride are expected to grow, putting downward pressure on prices. Meanwhile, naphthalene-based phthalic anhydride market prices are also expected to decline. Key focus areas: 1. Supply side: Overall operating rates for the phthalic anhydride industry are expected to rise next period, increasing supply pressure for OX-based material. 2. Demand side: Downstream operating rates are expected to weaken slightly next period, leading to a decline in industry demand and an overall reduction in consumption. 3. Cost side: Costs for OX-based phthalic anhydride are expected to remain stable, providing strong cost support for this segment. However, raw material industrial naphthalene prices are expected to weaken, offering insufficient cost support for the naphthalene-based segment.