Introduction: Since early September, geopolitical conflicts in the Middle East have driven up commodity futures prices, providing strong cost-side support. Driven by these cost factors, domestic o-xylene market prices surged rapidly.
Cost-Driven Surge in O-Xylene Market Prices
Recently, domestic o-xylene market prices have continued to rise, with cost-side factors being the primary driver. In early September, rising crude oil and commodity futures prices strengthened cost support from the upstream aromatics chain, significantly increasing industry costs. This cost-driven momentum, combined with tight spot supply of o-xylene, led major petrochemical plants to continuously raise their prices, further expanding the price increase in the domestic o-xylene market. By mid-September, however, expectations of easing geopolitical tensions in the Middle East shifted market sentiment toward peace talks. Commodity futures prices fell, leading to a wait-and-see attitude in the domestic o-xylene market. As cost pressures receded, o-xylene prices pulled back from recent highs.
| Figure 1: Domestic O-Xylene vs. Phthalic Anhydride Price Trend (CNY/ton) | Figure 2: Domestic O-Xylene Production and Capacity Utilization Rate Trend (tons, %) |
|---|---|
| Data Source: Chempricehub | Data Source: Chempricehub |
Maintenance Units Restarting; Expectations for Rising Industry Capacity Utilization
Since September, previously shut-down domestic o-xylene units have begun slowly restarting. During the month, Fujian Haichuang’s unit (240,000 tons/year) resumed operations, while Yangzi Petrochemical’s unit (260,000 tons/year) restarted in late September. However, restarts for Hongrun Petrochemical (50,000 tons/year) and Hainan Refining & Chemical (200,000 tons/year) were delayed. Overall, domestic o-xylene supply increased noticeably compared to August. With the expected full recovery of Yangzi Petrochemical’s unit, the domestic o-xylene industry’s capacity utilization rate is projected to continue rising in October, reaching approximately 58%. This should alleviate the tight supply situation in East China, thereby weakening the fundamental bullish factors that previously supported the o-xylene market.
Uneven Profit Distribution Across the Value Chain; Industry-Wide Profit Decline
| Figure 3: Recent Weekly Profit Comparison for O-Xylene, Phthalic Anhydride, and Downstream Products (CNY/ton) |
|---|
| Data Source: Chempricehub |
This period, the average weekly comprehensive profit for o-xylene was CNY 430/ton, down CNY 130/ton from the previous period. Profit for phthalic anhydride produced via the o-xylene method stood at CNY 352/ton, a decrease of CNY 90/ton or 20.36% from the previous period. Profit for phthalic anhydride produced via the naphthalene method was CNY 85/ton, down CNY 185/ton or 68.52%. Profits across the entire value chain declined comprehensively, showing some divergence. Upstream o-xylene profitability fell, as did profits in both the o-xylene-based and naphthalene-based phthalic anhydride sectors. Among downstream products, the DOP (dioctyl phthalate) sector shifted from profit to loss, while losses in the UPR (unsaturated polyester resin) sector widened. Recent price increases in phthalic anhydride have placed significant cost pressure on downstream producers. Although downstream market prices have rebounded, profitability varies widely among downstream segments.
Comments
0