Raw Material Costs Decline, Driving DBP Market Prices into a Gradual Weak Adjustment

Introduction: Raw materials peaked and then declined, weakening cost support for DBP. Combined with persistently weak downstream demand during the off-season, with no signs of improvement, overall market transactions were subdued, and transaction prices fluctuated downward. However, DBP operating loads remained at a moderate level overall, and spot supply was limited, so the pace of price declines was slow.

I. DBP market prices fell from highs

As raw material market prices continued to rise, particularly driven by phthalic anhydride market prices, DBP cost pressure kept increasing and supported market prices at high levels. However, toward the end of the month, geopolitical instability caused frequent fluctuations in international crude oil, which nevertheless trended downward overall. As a result, both DBP raw materials—n-butanol and phthalic anhydride—were affected. Combined with the downstream sector still in its off-season, overall operating rates and demand for DBP were limited. Market inquiry and transaction sentiment declined, with transactions concentrated at lower price levels. As market participants became increasingly cautious, the market price center began to fluctuate downward.

Table 1 Domestic DBP industry chain price summary (Unit: yuan/ton)

II. Dual raw materials pushed costs down from highs; DBP price center fluctuated downward

The raw material with the greatest impact on DBP prices this time was phthalic anhydride. Affected by Middle East geopolitical factors, international crude oil prices fell sharply, and overall market sentiment turned bearish. Meanwhile, o-xylene-based phthalic anhydride inventories remained low, and combined with low capacity utilization, this pushed the market center higher. However, follow-through at high price levels weakened. Naphthalene-based phthalic anhydride encountered resistance in selling at high prices, and its domestic market price showed a pattern of surging then falling, trending lower in a sluggish manner. n-Butanol also began to fall from its highs, but the overall decline was limited, mainly because some units had planned maintenance, limiting spot supply and providing some support to n-butanol prices.

Table 2 DBP cost-profit comparison table (Unit: yuan/ton)

III. DBP operating rates hovered at low loads

Terminal downstream demand remained in the off-season, with DBP demand staying tepid and procurement mainly limited to low-level rigid demand. In addition, both raw material prices rose, increasing cost pressure, and DBP profits once fell into losses. As a result, production plants reduced operating rates or increased maintenance shutdowns, though some previously maintained units gradually resumed. As of July 31, domestic DBP daily output fell to about 1,290 tons/day, with the daily operating load at around 47.56%. Although there was a slight increase, it was not significant.

IV. Market outlook

Cost side: For n-butanol, the later period will be increasingly affected by high costs and low profits, with a few planned maintenance units about to shut down, providing support to its market price. For domestic phthalic anhydride, mainly due to tight supply availability and concentrated replenishment purchasing, the supply-demand imbalance could be exacerbated, and prices are still expected to continue pushing higher.

Supply-demand side: On the downstream demand side, the terminal market is generally mediocre and still in the off-season. Demand is expected to remain rigid-demand-based, with insufficient overall support.

Naphthalene-based phthalic anhydride is declining slowly from highs, but high costs still provide some support to its price. On the demand side, terminal downstream maintains rigid demand and purchases on dips. DBP operating loads are stable at a moderate level. Overall, the domestic DBP market is expected to consolidate with fluctuations in the coming period.