In January 2026, China's phthalic anhydride market experienced a cycle of strong cost-driven price surges followed by high-level volatility constrained by demand. Taking the East China market as an example, phthalic anhydride prices derived from o-xylene started near 5,900 RMB/ton at the beginning of the month. Driven by persistent tightness in o-xylene supply, prices surged to around 6,300-6,400 RMB/ton during mid-to-late January. Concurrently, Hebei naphthalene-based phthalic anhydride prices climbed from ¥5,500/ton to a monthly peak near ¥5,900/ton. However, the high prices struggled to pass down smoothly. As downstream resistance intensified and the market lacked support from new orders, prices came under pressure and eased toward month-end. By January 29, East China's o-xylene-based phthalic anhydride prices retreated to 6,200-6,250 RMB/ton, while Hebei's naphthalene-based phthalic anhydride prices corrected to around 5,550 RMB/ton. The market exhibited a pronounced “first up, then down” trajectory throughout the month, with expanded price fluctuations. The core conflict remained the intense tug-of-war between “strong cost support” and “weak terminal demand.”
Market Price Trends and Analysis:
January's phthalic anhydride market can be clearly divided into three phases. The first phase (early to mid-January) was a one-sided rally driven by costs. This surge stemmed from a supply crisis in upstream paraxylene feedstock. Major domestic producers like Yangzi Petrochemical and Zhenhai Refining & Chemical implemented large-scale production cuts, causing spot market resources to tighten sharply and propelling paraxylene prices upward. Cost pressures rapidly cascaded through the supply chain. Phthalic anhydride producers faced not only raw material procurement difficulties but also low inventory levels—or even oversold conditions—due to industry-wide low operating rates. Driven by rising costs and tight supply, producers strongly resisted price cuts and pushed for increases, fueling bullish market sentiment. Phthalic anhydride prices rose in tandem across East China, South China, and North China markets. Concurrent strength in industrial naphthalene prices further bolstered the naphthalene-based phthalic anhydride segment.
Phase Two (mid-to-late January) marked a period of stalemate and consolidation under high-price suppression. As phthalic anhydride prices reached elevated levels, transmission resistance along the supply chain began to manifest. Although the fundamentally tight supply situation remained unchanged, downstream terminal industries such as plasticizers and unsaturated resins had reached their limit in accepting high-priced raw materials. Downstream factories shifted their procurement strategy to focus on essential needs while actively depleting existing inventories, leading to increasingly sparse new order negotiations. Concurrently, the price gap between o-toluene-based and naphthalene-based phthalic anhydride continued to widen, further dampening overall market buying sentiment. Buyers and sellers engaged in intense negotiations, causing prices to lose upward momentum and transition into a high-level sideways consolidation phase. Market trading activity turned cautious and wait-and-see.
Phase Three (Late January): Pressure-Induced Easing Period Driven by Weak Demand. As month-end approached, with no further positive catalysts, sluggish actual demand ultimately weighed on market prices. Particularly in the naphthalene-based phthalic anhydride market, support from industrial naphthalene prices weakened, compounded by persistently low end-user buying interest. Facing shipment pressures, some manufacturers began modestly adjusting their quotations downward. Phthalic anhydride derived from ortho-xylene showed relative resilience due to persistent tightness in core raw material ortho-xylene supply. However, transactions remained sparse at elevated prices, shifting overall market sentiment toward bearishness. Prices stabilized with a weakening trend. After a supply-driven rally throughout the month, the market ultimately revealed fatigue as demand failed to absorb the gains.
Short-Term Outlook:
Looking ahead to February, China's phthalic anhydride market faces a critical juncture with the Spring Festival holiday. Price movements are expected to diverge significantly before and after the holiday. In the near term, cost and supply factors will continue to provide foundational support. The tight supply of naphthalene is unlikely to ease substantially before the holiday, with its elevated prices reinforcing the cost floor for phthalic anhydride. Simultaneously, the market may see a final round of small-scale pre-holiday stockpiling demand from downstream buyers, providing a temporary price boost. The market is expected to remain stable with a slight upward bias in the first half of the month. However, the Spring Festival holiday will act as a watershed. As the holiday period begins in the latter half of the month, widespread shutdowns at downstream factories and restricted logistics will cause actual market transactions to stall, entering a “prices exist but no market” holiday state. Phthalic anhydride producers may also reduce operating rates accordingly. Post-holiday market focus will shift to the recovery pace of both supply and demand. Historical experience suggests slow downstream restart rates and sluggish demand recovery after the holiday, while phthalic anhydride supply gradually increases as plant rates rise. The market will face inventory digestion pressure, posing downside risks to prices. In summary, the January phthalic anhydride market completed its upward surge driven by costs, but demand bottlenecks constrained its sustainability and peak. The February market will be more rhythmically controlled by seasonal factors. Overall, it is expected to shift from the earlier “cost-demand tug-of-war” to a “holiday-mode supply-demand slump,” with narrower price fluctuations as it awaits new fundamental guidance after the holiday.
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