Healthy Buying Sentiments in China Inclining Phthalic Anhydride Demand

The Phthalic Anhydride market witnessed a marginal rise this week in China. Soaring raw material prices, downstream demand, and trade disruptions were the major reasons for the price change. Moreover, the lockdown in Tianjin also affected the price trend.

As the COVID cases are easing in China's most affected areas, the demand for crude has started to rise, pushing up the crude prices. The raw materials used in the production of Phthalic Anhydride, which is a direct derivative of crude, are O-Xylene and Naphthalene; thus, the price rise in upstream crude affects the pricing of Phthalic Anhydride. One of the traders informed us that since crude prices were rising this week, manufacturers were forced to increase the downstream prices to support their margins.

Phthalic Anhydride is widely used in producing plasticizers, polyester resins, and alkyd resins. The demand for these downstream products gained strength from the end use automotive, healthcare, and construction sectors. The relaxation of the lockdown restrictions resumed the domestic market activity with healthy buying and selling sentiments. However, the soaring demand from consumers has resulted in increased production activities, which further led to the upward trend in Phthalic Anhydride pricing. As a result, from May 24th to May 26th, Phthalic Anhydride prices increased by 1.1%, with an approximate inclination of $13/tonne.

In addition, the current lockdown in Tianjin has been affecting the trade as well as the domestic market in that particular city. The Shanghai port disruption, which is about to resume its activity on June 1, has hampered the supply of products due to labour shortages and has influenced the Phthalic Anhydride price trend.

According to the ChemAnalyst, "The Phthalic Anhydride prices are likely to increase in the upcoming weeks due to the healthy supply chains if the Shanghai port resumes. The expected rise in demand across the region and healthy consumption might pull up the Phthalic Anhydride price trend. Moreover, the upstream crude values are not expected to drop."