Introduction: A temporary shutdown at Yangzi Petrochemical’s ortho-xylene unit, combined with delayed product output from Hainan Refining & Chemical, has intensified supply tightness and driven market prices higher. However, the sharp decline in international crude oil prices during the week caused a collapse in cost support across the aromatics industry chain, leading phthalic anhydride (PA) prices to peak and then fall back.
Specifically, this period saw Jiangsu-based ortho-method PA prices rise before falling back, fluctuating within the range of RMB 10,500–10,800/ton. Hebei-based naphthalene-method PA prices also rose before retreating, moving within the range of RMB 9,900–10,300/ton. During this cycle, domestic PA prices peaked and subsequently declined, with cost factors becoming the primary driver of market movements. Early in the week, price increases in raw material ortho-xylene, coupled with tight spot supplies in the domestic PA industry, drove costs higher and pushed PA prices up. However, strong follow-through from end-user demand was lacking, constraining high-level transactions. By mid-to-late week, the plunge in international crude oil prices led to a collapse in upstream cost support within the aromatics chain, exacerbating wait-and-see sentiment and causing domestic PA prices to face downward pressure.
Recently, the persistent wide price gap between domestic ortho-method and naphthalene-method PA sources has led to naphthalene-method PA partially substituting for ortho-method PA. Domestic inventory levels for naphthalene-method PA are generally oversold, and due to its relatively lower price compared to ortho-method PA, it has typically been the leading driver in each market rebound. However, entering this week, as supply shortages of northern naphthalene-method PA intensified, the naphthalene-method market surged strongly. Meanwhile, price gains for ortho-method PA were limited, resulting in a narrowing of the price spread between the two methods.
| Figure 1: Trend Chart of Domestic PA Market Prices (Unit: RMB/ton) | Figure 2: Trend Chart of Price Spread Between East China Ortho-Method PA and Hebei Naphthalene-Method PA (Unit: RMB/ton) |
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| Data Source: Chempricehub Information | Data Source: Chempricehub Information |
Recently, on one hand, insufficient supply of raw material ortho-xylene has kept the capacity utilization rate of the ortho-method PA industry persistently low. On the other hand, concentrated maintenance shutdowns of naphthalene-method PA units have led to a continuous decline in the capacity utilization rate of the domestic naphthalene-method PA industry, further aggravating the shortage of naphthalene-method PA supplies. According to Chempricehub monitoring data, the overall capacity utilization rate of the domestic PA industry stood at 55%, a slight month-on-month decrease of 0.5% and a year-on-year drop of 8%.
| Figure 3: Trend Chart of Capacity Utilization Rate in the Domestic PA Industry |
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| Data Source: Chempricehub Information |
During this period, total PA supply increased. While ortho-method PA operating rates declined, naphthalene-method PA operating rates rose, leading to an overall increase in industry output despite a drop in the aggregate capacity utilization rate. This was primarily due to the commissioning of Shandong Huineng’s new 70,000-ton/year unit this week, which adjusted the base capacity figure. Import volumes are negligible; therefore, weekly total supply assessments no longer include imports and rely solely on domestic production. In terms of downstream consumption, DOP usage declined, DBP usage remained stable, UPR usage fell, and export volumes decreased. Overall consumption is assessed as declining, resulting in a supply-demand balance favoring surplus, with the positive balance gap expanding. The supply-demand dynamics within the cycle aligned with previous expectations. Supply-demand data exerted some pressure on the market, which, combined with the sharp drop in crude oil prices, hindered PA shipments. Looking ahead, market supply is expected to grow as more enterprises resume operations than previously anticipated to remain shut down. Conversely, downstream unit utilization is expected to decline. Theoretically, supply will exceed demand, and the absolute value of the supply-demand gap is projected to widen, placing pressure on prices.
It is anticipated that the supply-demand gap for PA will widen in the next period. With insufficient cost support and rising expectations for industry capacity utilization, the market faces a downside trend. Key focus areas include:
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