Phthalic Anhydride Prices Plummeted due to the Market's Off-Season and the Disappearance of the Price Premium

According to the commodity market analysis system of SunSirs, as of July 6, the quoted price to ortho-xylene-based phthalic anhydride stood at 7,733.33 RMB/ton. This represents a fluctuating decline of 2.52% from the price of 7,933.33 RMB/ton recorded on June 30, and a significant drop of 10.94% from the price of 8,683.33 RMB/ton on June 1. Phthalic anhydride prices fell by 200 RMB/ton in July, and have plummeted by 950 RMB/ton since the beginning of June, marking a substantial decline in the domestic market price.

Phthalic Anhydride Market Plummeted

Following the agreement reached between the US and Iran, the geopolitical risk premium in the Middle East rapidly dissipated, causing international crude oil prices to direction downward. This decline triggered a cost transmission effect across the entire aromatics value chain—from crude oil to xylene and then to orthoxylene. Sinopec lowered its listed price to orthoxylene, reducing production costs to phthalic anhydride derived from the orthoxylene process; meanwhile, manufacturing naphthalene prices also weakened, further lowering raw material costs to phthalic anhydride. Demand remained sluggish as the downstream sectors to DOP and unsaturated resins entered their off-season; factories showed little interest in restocking, operating rates hovered at only around 50%, and market trading was lackluster. The downward direction in international crude oil prices further fueled bearish market sentiment, driving down phthalic anhydride prices.

Cost Support to Phthalic Anhydride Weakened

Following the easing of US-Iran tensions, international crude oil prices fell sharply, immediately impacting the aromatics supply chain. As of July 6, the listed price to ortho-xylene stood at 7,800 RMB/ton, a drop of 1,400 RMB/ton from the 9,200 RMB/ton recorded on June 1. This significant decline in raw material costs—compounded by manufacturing naphthalene weakening in tandem with the broader chemical market and a general downward shift in feedstock price levels—has intensified expectations of further declines in raw material costs, thereby weakening the cost support to phthalic anhydride.

Supply of Phthalic Anhydride Was Low

On the supply side, enthusiasm among phthalic anhydride producers to ramp up operations remains low; some facilities are running at low loads to extended periods or have suspended operations, causing the sector's overall operating rate to dip slightly to 50%. Aggregate inventories at both production vegetation and ports remain low, with no significant stock accumulation; meanwhile, downstream purchasing has contracted, resulting in a relative surplus of spot market supply.

Weak demand to phthalic anhydride

During the traditional off-season to the downstream plasticizer sector, operating rates have dropped to 40–50%. Demand from end-consumption sectors such as real estate and construction materials has shown no substantial improvement; downstream manufacturers are purchasing strictly on an as-needed basis with zero inventory, refusing to lock in raw material prices in advance and resisting the high cost of phthalic anhydride (PA). Consequently, downstream demand provides insufficient support to PA prices, while the continued decline in the price of the finished product—DOP—exerts downward pressure on PA procurement costs. With international PA prices falling and Chinese export orders shrinking, the pressure of oversupply has intensified, further weakening the support to any rise in PA prices.

Market Outlook

Analysts at the SunSirs Phthalic Anhydride (PA) division assess the situation as follows: regarding costs, prices of crude oil and ortho-xylene have dropped sharply; regarding demand, the traditional off-season continues to downstream sectors. Weak demand is the primary issue, and falling costs continue to exert downward pressure; while low operating rates on the supply side might slow the pace of the decline, they are insufficient to reverse the market's weakness. Overall, the outlook is to a continued downward direction in phthalic anhydride prices.