Recently, the domestic phthalic anhydride market has experienced a round of rapid price increase triggered by geopolitical conflicts. The market has rapidly shifted from a stalemate to an outbreak and then to a high-level game within just a few days. As of March 3, the mainstream price of ortho-phthalic anhydride in East China has risen to 6,500-6,550 RMB/ton, a significant increase of about 400 RMB/ton compared with 6,050-6,150 RMB/ton at the end of February; the price of naphthalene-based phthalic anhydride in Hebei has also jumped to around 6,200 RMB/ton, with low-priced supplies in the market basically disappearing and a strong atmosphere of speculative price increases.

The trigger for this market rally stems from the rapid deterioration of the situation in the Middle East. On February 28, the United States and Israel launched large-scale military operations against Iran, which immediately counterattacked and announced the closure of the Strait of Hormuz. Known as the "throat" of global oil and gas transportation, the strait handles about 20% of the world's oil trade. Its closure directly triggered panic in the market over crude oil supplies. Although international crude oil saw a technical correction after opening with a sharp rise on March 2, geopolitical risks have not dissipated - Iran's Supreme Leader and several commanders were confirmed dead, the US side stated that the military operations may last about four weeks, and Britain, France, and Germany also expressed their willingness to take "necessary defensive actions". The disruption of shipping in the Strait of Hormuz and the shutdown of multiple oil and gas facilities in the Middle East have kept the crude oil market in a state of tension, injecting sustained upward momentum into the cost side of chemical products.

Cost transmission has become the core driver behind the current rise in phthalic anhydride prices. The sharp increase in international oil prices has directly pushed up the price of upstream raw material xylene. As of March 3, the market price of isomeric xylene has risen to a high level of 5,850-5,900 RMB/ton. Supported by both cost-driven factors and tight spot circulation, o-xylene enterprises have a strong willingness to raise prices, and some holders of goods have shown sentiments of supporting prices and being reluctant to sell. At present, the listed price of Sinopec East China's o-xylene has risen to 6,500 RMB/ton. The strong transmission of upstream costs, coupled with the sharp increase in the bidding price of raw material industrial naphthalene, has provided a rare price increase window for phthalic anhydride enterprises that have been in a state of loss for a long time. Manufacturers have taken the opportunity to actively raise prices, and market quotations have risen accordingly.

From the perspective of phthalic anhydride's own supply and demand structure, the supply side shows a differentiated trend. For naphthalene-based phthalic anhydride, the positive impact of maintenance continues to unfold: Tangshan Huayi's set of equipment has been shut down for catalyst replacement, and multiple sets of equipment such as Xingtai Xuyang, Xuecheng Energy, and Baosteel Zhanjiang are scheduled to undergo maintenance one after another in mid-to-late March. The expectation of tight supply is strong, the market is dominated by a speculative upward atmosphere, and industry players have a strong mentality of hoarding goods and being reluctant to sell. For o-xylene-based phthalic anhydride, although some equipment has been restarted one after another, the overall supply pressure is currently not large, and manufacturers have a clear willingness to follow the upward trend. However, the demand side shows an obvious lag in follow-up. Downstream industries such as plasticizers and UPR have limited acceptance of high-priced raw materials that have risen rapidly in the short term, and their willingness to purchase at higher prices is cautious. Market transactions are mainly maintained by rigid demand, and actual transaction volume is difficult to increase. This situation of "hot upstream and cold downstream" has led phthalic anhydride enterprises to face continuous resistance pressure from the demand side while strongly pushing up prices, making the characteristics of market games increasingly obvious.

In terms of market sentiment, phthalic anhydride enterprises have an unprecedentedly unified willingness to take the opportunity to strongly push up prices after long-term losses. In some regions, there has even been a phenomenon of limited sales, hoping to pass on the cost pressure to downstream. However, the cautious attitude of downstream users makes the price increase lack a solid demand foundation, and both buyers and sellers have entered a stage of high-level stalemate. As prices have risen rapidly to a relatively high level, the risk of chasing high prices in the market has increased, and the wait-and-see sentiment has gradually become stronger. Industry insiders generally pay attention to whether the demand side can gradually follow up.

Looking ahead to the recent trend, the support from the cost side remains the core force driving the phthalic anhydride market. Currently, the geopolitical situation in the Middle East is still unclear, and the continued disruption to shipping in the Strait of Hormuz is affecting global oil and gas supplies, with international oil prices expected to remain high. Driven by both cost transmission and tight spot supply, the upstream raw material o-xylene is still expected to continue rising, which will provide strong cost support for the phthalic anhydride market; the sharp increase in the bidding price of raw material industrial naphthalene has also injected upward momentum into naphthalene-based phthalic anhydride. On the supply side, the maintenance plans for naphthalene-based phthalic anhydride are relatively concentrated in March. As multiple naphthalene-based plants in the north are shut down one after another, the pattern of regional tight supply is expected to continue; the overall supply pressure of o-xylene-based phthalic anhydride is controllable, and manufacturers have a clear willingness to maintain prices. However, the weak follow-up on the demand side remains a key variable restricting the upward space of the market, and the downstream's ability to accept high-priced raw materials remains to be seen. Generally speaking, driven by strong costs, it is expected that the phthalic anhydride market will continue to operate in a relatively strong manner in the near future, and the price center may still rise, but the increase may be restricted by the demand side's acceptance capacity. The pattern of high-level market fluctuations and intensified game is becoming increasingly obvious. 

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