In 2025, the o-xylene (OX, the same below) industry experienced a fundamental recovery and restructuring of its profitability, with full-year profits showing a distinct "high in the first half, low in the second half" trend, escaping the continuous losses of previous years. Compared to the meager average profit of only 89 RMB/ton in 2024, the profit level of the OX industry rose to 296 RMB/ton in 2025. From a historical high exceeding 1,000 RMB/ton in the second quarter to falling back into the shadow of losses by the end of the year... the reasons for the fluctuations in OX industry profits all point to upstream cost advantages, export-driven growth, and capacity expansion.

Data shows that at the beginning of 2025, the OX industry was still struggling to break even. From January to February, although Sinopec East China's listed price increased from 6,700 RMB/ton to 7,200 RMB/tonin mid-January, the price of the raw material, isomerized xylene, also rose simultaneously. This continuous cost pressure squeezed profit margins, leaving most companies in the industry hovering at the break-even point or even incurring losses. During this period, the OX market lacked a clear driving logic, resulting in weak profit performance. However, a turning point occurred in the second quarter, with the highest annual profit for OX appearing from late April to early May, peaking at over 1,190 RMB/ton, reaching a historical high in recent years.

Industry insiders say that the core driving force behind this performance was not a significant increase in product prices, but rather a substantial drop in raw material costs. The international crude oil and aromatics markets were under pressure, and the price of isomerized xylene fell from over 6,500 RMB/ton in March to around 5,400 RMB/ton in early May, a drop of over 1,000 RMB/ton. At the same time, the listed price of OX remained at a high level of 7,100-7,300 RMB/ton for a considerable period. This was mainly due to two supporting factors: firstly, the concentrated maintenance of major domestic facilities such as those of Sinopec Yangzi Petrochemical, which caused a temporary supply shortage; and secondly, strong export market performance, especially a significant increase in exports to India, which effectively diverted domestic supply pressure and provided solid price support. The widening "scissors gap" between costs and product prices led to a significant increase in profit margins.

However, the high-profit situation in the OX industry proved unsustainable. Entering the middle of the year, especially after June, industry profits gradually declined from their peak. This turning point stemmed from the combined effect of two key factors. First, the cost advantage diminished; the price of isomerized xylene stabilized after a decline in the middle of the year and entered a period of range-bound fluctuations, shifting the cost's contribution to profits from a "driving force" to a "neutral" one. More importantly, the supply and demand fundamentals reversed. On the one hand, new production capacity from companies such as Yulong Petrochemical and Tianjin Petrochemical was gradually released in the second half of the year, significantly increasing domestic spot supply, and the market shifted from a tight balance to a surplus. On the other hand, the downstream phthalic anhydride industry remained in a state of overall losses, with weak demand and increasing resistance to high-priced raw materials. Although OX exports maintained a certain scale, they were unable to fully offset the increased domestic supply pressure. Therefore, OX prices lost support and began to passively follow the decline in raw material prices, with listed prices being lowered multiple times in June, July, August, and from October to December. The lowest point of profitability occurred in November and December, when the OX industry fell back into losses, with losses exceeding 300 RMB/ton at their peak. At this time, the oversupply effect brought about by the new capacity additions became fully apparent, while terminal demand was even weaker during the traditional off-season, creating a negative feedback loop in the industry chain, and profits were rapidly eroded.

Throughout 2025, the recovery in the OX industry's profits was essentially a temporary outcome resulting from the combined effects of "cost collapse" and "export benefits," possessing a degree of external influence and fortuitousness. The subsequent contraction and eventual losses in profits reflect the harsh reality that, under a large-scale capacity expansion cycle, the OX industry will ultimately return to being priced by its own supply and demand fundamentals. The export market played a crucial "buffer" role, delaying the phenomenon of oversupply, but it failed to alter the long-term trend of a shift towards a looser supply and demand structure domestically. Looking ahead, whether the OX industry can maintain positive profits will no longer depend solely on temporary cost fluctuations or export opportunities, but will instead test how companies can build sustainable competitiveness through technological upgrades, cost control, and in-depth global market strategies in a constant state of oversupply.

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