According to China Chemical News, since the fourth quarter began, phthalic anhydride prices have continued to decline after the “Golden September and Silver October” market rally failed to materialize. Currently, phthalic anhydride prices have reached RMB 5,700 per ton, hitting a four-year low. Faced with supply-demand imbalances unlikely to be resolved in the short term, industry insiders widely believe the market's low-level stagnation will persist.

Supply Surplus Dashes Peak Season Expectations

Throughout this year, the phthalic anhydride market has experienced a sustained downward trend. The lackluster performance during both peak and off-peak seasons reflects the industry's supply-demand mismatch.

September saw tepid market activity, with phthalic anhydride prices in East China's Linfan region fluctuating between RMB 6,100 and 6,250, showing limited overall volatility. October witnessed a sharp downward correction, with prices breaching the 5,900 yuan threshold—marking a new low since 2025 and exceeding a RMB 1,000 decline compared to the same period in 2024. Entering November, the market showed no signs of recovery, with the downward trend persisting.

Increased supply remains the primary driver behind the sluggish phthalic anhydride market. This year saw the commissioning of Aike (Ningbo)'s 50,000-ton-per-year ortho-phthalic anhydride facility, bringing China's total ortho-phthalic anhydride capacity to 1.63 million tons per year—a 3% increase over 2024. Shanxi Sanqiang's 50,000-ton/year and Weijiao Group's 50,000-ton/year naphthalene-based phthalic anhydride plants have also commenced operations, boosting China's naphthalene-based phthalic anhydride capacity to 1.72 million tons/year—a 5.8% increase over 2024. This surge in supply has significantly weakened producers' bargaining power. To maintain cash flow and market share, producers widely adopted profit-sacrificing sales, driving the price center of phthalic anhydride lower. It is anticipated that the decline in phthalic anhydride prices during the fourth quarter will narrow somewhat due to increased price-supporting intentions from factories. However, constrained by weak fundamentals, the market's rebound momentum remains insufficient.

Profitability Reversal Originates from Upstream Differentiation

Phthalic anhydride production primarily divides into ortho-phthalic anhydride and naphthalene-based phthalic anhydride. In 2025, a pronounced reversal in profitability emerged between the two methods.

Previously, naphthalene-based phthalic anhydride maintained stronger profitability due to its cost advantage. Despite experiencing periodic losses since 2023, its profitability remained higher than that of ortho-phthalic anhydride. By 2025, this dynamic quietly shifted. Following the commissioning of Phase II of the aromatics complex at Yulong Island Refining & Chemical Integration Project and the restart of Tianjin Petrochemical's aromatics unit, increased ortho-xylene supply drove down market prices. This alleviated cost pressures for ortho-phthalic anhydride, lifting it from losses of RMB300-500 to a marginally profitable state.

In contrast, naphthalene-based phthalic anhydride struggled near the break-even point early in the year. However, cost pressures intensified starting in the second quarter, with product losses exceeding RMB 900 . Although industrial naphthalene prices declined in the fourth quarter, partially restoring naphthalene-based phthalic anhydride profits, it remained unable to effectively break even. Overall, the industry operated at a cost inversion state, with operating rates dropping to low levels of 40% to 50%.

Industry insiders widely believe that divergent raw material trends will persist, and the profitability dynamics of the two production processes remain unchanged. The phthalic anhydride industry is entering a period of deep adjustment. Sustained low operating rates and the permanent exit of some outdated capacity may provide limited room for profit recovery, but a complete turnaround will take time.

As an integrated internet platform providing benchmark prices, on November 26, the benchmark price of phthalic anhydride on SunSirs was 5,800.00RMB/ton, a decrease of 2.52% compared with the beginning of the month (5,950.00 RMB/ton).

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