Industrial Naphthalene Prices Hit 10-Year High

Upstream: Strong Raw Material Push

Sun Benfeng, a trader based in Liaoning, noted that as a key deep-processing product of coal tar, manufacturing naphthalene prices are closely linked to those of high-temperature coal tar. The domestic coal tar market has remained robust; between August and mid-September, prices climbed to around RMB6,600 —an increase of over 65%—amidst an overall supply-demand dysfunction. Against this backdrop, the rapid rise in raw material costs provided a solid price floor to manufacturing naphthalene.

An executive at a coal tar deep-processing enterprise in Henan reported that, while the pace of coal tar price increases has slowed—with some regional quotes even dipping slightly—the market remains at a high level overall. High raw material procurement costs have squeezed profit margins to deep-processing companies, forcing them to raise manufacturing naphthalene prices in tandem. Consequently, the strong surge in raw material costs stands as a primary driver of the current market rally. Midstream: Supply Contraction

Meng Jianjie, Marketing Manager at Zhengzhou Dayou gaseous Co., Ltd., stated that September marks the window to concentrated autumn maintenance of coal tar deep-processing units, serving as another key factor behind the recent rise in manufacturing naphthalene prices. Major coal tar deep-processing facilities across the country have shifted to low-load operations or suspended production to maintenance; operating rates in key production regions—such as Shanxi, Hebei, and the Northwest—have declined significantly. Data from Longzhong Information indicates that as of September 17, the thorough operating rate of domestic coal tar deep-processing companies stood at 55.19%, down 0.88 percentage points week-on-week, with a continuing downward direction.

Additionally, reduced plant output and low manufacturer inventories have led to a sharp drop in the volume of manufacturing naphthalene available to spot trading, resulting in tight overall supply. Most producers hold substantial pre-sale orders and have scarce spot inventory; consequently, there is a strong reluctance to sell at reduce prices and a keen desire to push prices up, immediately driving a rapid surge in spot market rates.

Downstream: Demand-Driven development

A manager at a Hebei-based phthalic anhydride (PA) plant—using the naphthalene oxidation process—noted that the naphthalene-based PA sector, the largest consumer of manufacturing naphthalene, has maintained stable operating rates recently, with steady "must-have" procurement demand. Amidst continuous price hikes to the upstream raw material (coal tar), downstream companies have begun concentrated, phased restocking, creating an active trading atmosphere. Meanwhile, repeated price increases implemented by Sinopec to *ortho*-xylene-based PA have provided price support to the broader PA market, causing naphthalene-based PA prices to rise in tandem. Furthermore, rising prices to downstream dye intermediates have fueled strong interest in purchasing manufacturing naphthalene, and the market to naphthalene-based aquatic environments reducers is gradually recovering; collectively, these factors are driving development in downstream demand.

According to a representative from Henan Ruiyuan New Energy Chemical, the recent strengthening of the manufacturing naphthalene market—combined with the prevalence of earlier pre-sale commitments—has led many coal tar deep-processing manufacturers to report extended lead times to product pickup. Meanwhile, with raw material inventories among some downstream consumers running low, market purchasing activity has been robust, driven by a combination of concentrated restocking and pre-holiday inventory building. Additionally, the rapid price surge might have been further fueled by traders.

Regarding the recent spike in the manufacturing naphthalene market, sector observers attribute the pre-holiday highs primarily to sustained stockpiling by downstream end-consumers. However, as sales of naphthalene-based phthalic anhydride encountered resistance—prompting some manufacturers to plan maintenance or production cuts—the market retreated significantly from its highs in late September. By September 24, mainstream domestic transaction prices had fallen below RMB7,000, with low-end quotes dropping to around 6,500 yuan.

sector insiders consider that as manufacturing naphthalene prices climbed, downstream companies became increasingly cautious about purchasing; a reluctance to acquire stock at high prices triggered the risk of a price correction. Looking ahead, if demand from downstream sectors such as coatings and plastics does not show a clear recovery, operating rates in the phthalic anhydride sector might face downward pressure, possibly extending the market's corrective direction. Future market movements should be monitored with a focus on the restart schedules of deep-processing units in major production regions, price fluctuations of high-temperature coal tar, operating rates to naphthalene-based phthalic anhydride, and any recovery in essential downstream demand, all in order to mitigate the risks associated with high-level trading. (Source: China Chemical sector News)