Phthalic anhydride

Phthalic Anhydride Market Intelligence Report (July 1, 2026)

I. Recent Price Trends
1. East China Region
- Ortho-based Phthalic Anhydride: Mainstream quotation on June 29 was RMB 8,100–8,300/ton, down 5.57% from the early-June level (RMB 8,683.33/ton), marking a new short-term low.
- Naphthalene-based Phthalic Anhydride: Mainstream quotation on June 29 stood at RMB 7,300–7,500/ton, declining in tandem; profitability for naphthalene-based production has shrunk dramatically to marginal levels.
- Regional Price Spread: In Jiangsu Province, ortho-based phthalic anhydride prices were approximately RMB 200–300/ton lower than the East China regional average, reflecting localized supply-demand imbalances.

2. Other Regions
- Shandong Province: Some producers quoted as low as RMB 4,500–5,000/ton (purity ≥99.5%), though such quotations likely reflect small-batch or non-standard product transactions and diverge significantly from mainstream market pricing.
- National Benchmark Price: According to Shengyiso, the benchmark price for ortho-based phthalic anhydride on June 29 was RMB 8,200/ton—having fluctuated since the beginning of the year (approx. RMB 8,037.5/ton) before returning to a low level.

II. Analysis of Price Drivers
1. Collapse in Cost Base
- Crude Oil Price Decline: Following the U.S.–Iran agreement, international oil prices fell sharply, transmitting downward pressure across the aromatic hydrocarbons chain. Ortho-xylene prices dropped to RMB 8,200/ton in June—a decline of over 10% year-on-year.
- Weakness in Industrial Naphthalene: Although naphthalene-based feedstock costs are independent of crude oil, industrial naphthalene prices also softened. The broader decline in phthalic anhydride prices has compressed naphthalene-based margins into the marginal-profit zone.

2. Intensifying Supply-Demand Imbalance
- Supply Side:
- Ortho-based phthalic anhydride production remains unprofitable, pushing industry operating rates down to ~50%. Several facilities are running at persistently low loads or have been idled.
- Naphthalene-based production retains modest profitability but faces sluggish downstream demand, resulting in minor load reductions. Overall inventory remains low, yet physical market liquidity is excessive.
- Demand Side:
- The downstream plasticizer industry has entered its traditional off-season, with operating rates dropping to ~50%. Demand from end-user sectors—including real estate and construction materials—has shown no signs of improvement. Plastic product manufacturers continue adopting a “just-in-time procurement” strategy, further dampening phthalic anhydride demand.
- Export Market: Resumption of cross-strait navigation has coincided with falling global phthalic anhydride prices, leading to contraction in Chinese export orders and intensifying domestic supply pressure.

3. Market Sentiment and Trading Behavior
- Downstream buyers remain highly resistant to elevated prices. The recent price decline has failed to meaningfully stimulate restocking activity. Market transactions are tepid overall, and some producers have resorted to price cuts to accelerate cash flow recovery.

III. Forward Outlook
1. Short Term (1–2 months)
- Price Trend: Weak and range-bound. With diminishing bottom support from crude oil and ortho-xylene prices—and persistent demand headwinds—phthalic anhydride prices may continue trending downward, albeit at a moderated pace. The ortho-based price could potentially fall below RMB 8,000/ton.
- Operating Rate Divergence: Ortho-based producers may further curtail output due to losses, while naphthalene-based units maintain low-load operations amid marginal profitability. Overall supply will contract, yet insufficient to rebalance the market.

2. Medium Term (3–6 months)
- Seasonal Demand Recovery: Starting in September, the plasticizer sector may gradually enter its peak season. Should end-market demand improve, phthalic anhydride prices could experience a short-lived rebound—though upside potential remains capped by structural overcapacity.
- Cost-Pass-Through Risk: A rebound in crude oil prices—or tightening environmental regulations driving up raw material costs—could lend price support. However, any “cost-driven” price increase risks being undermined by weak downstream demand absorption.

3. Long Term (1+ years)
- Accelerated Industry Consolidation: China’s phthalic anhydride industry concentration ratio has already reached 58% (measured by share of producers with annual capacity ≥100,000 tons). Future capacity expansion will face mounting constraints from environmental compliance requirements and thin profit margins, prompting gradual exit of smaller players and stabilization of market structure.
- Differentiated Competition in Non-Standard Products: Downstream users increasingly prioritize purity and batch consistency. Producers capable of customized manufacturing (e.g., ≥99.9% purity, tailored formulation adjustments) are poised to capture premium segments, widening price dispersion among non-standard products.

IV. Risk Alerts
1. Crude Oil Price Volatility: Geopolitical conflicts or shifts in OPEC+ production agreements may trigger sharp cost-base fluctuations.
2. Underwhelming Demand Recovery: Prolonged weakness in real estate and construction materials sectors could sustain long-term demand pressure on phthalic anhydride.
3. Tighter Environmental Regulations: Intensified local environmental inspections may force temporary shutdowns, causing short-term supply contractions but ultimately catalyzing industry upgrading.