Ortho-xylene (Orthoxylene, 1,2-Dimethylbenzene, 1,2-Xylene, CAS: 95-47-6) is a core segmented product in the aromatic hydrocarbon chain. Over 90% of global consumption is used to produce phthalic anhydride (PA), and phthalic anhydride-grade o-xylene is the mainstream specification in market circulation. The remaining solvent-grade o-xylene is widely used in coatings, pesticides, organic synthesis and aviation gasoline additives. After the National Day holiday, driven by rising international crude oil prices and tight domestic spot supply, China’s o-xylene market maintained a firm upward trend with solid cost support, and the downstream PA market rebounded simultaneously, showing obvious industrial chain linkage effects.
1. Weekly Market Review
1.1 Price Trend: Spot Center Steadily Rising with Regional Differentiation
After the National Day holiday, domestic o-xylene spot quotations rose steadily along with costs. In Shandong market, mainstream negotiation prices for 99% purity o-xylene from Yangzi Petrochemical stood around 8,200 yuan/ton, rebounding from the pre-holiday low. Quotations in East and South China followed suit, with strong price-holding willingness among holders. Back in mid-to-late September, impacted by the substitution effect of naphthalene-based PA driven by falling industrial naphthalene prices, o-xylene prices saw a phased pullback. As the overall aromatic market rebounded after the holiday, market sentiment turned bullish again.
1.2 Core Drivers: Dual Support from Cost and Supply
The cost side is the direct driver of this round of rally. During the National Day holiday, international crude oil continued to rise driven by supply shortage expectations, and aromatic futures rallied collectively with strong speculative sentiment. As a segmented product in the aromatic chain, o-xylene’s cost side lifted simultaneously, providing solid bottom support for spot prices.
2. Downstream Demand & Industrial Chain Linkage
O-xylene demand is highly concentrated in the PA sector. The recent price spread between ortho-based and naphthalene-based PA directly affects the demand rhythm and market pattern of o-xylene.
2.1 Ortho-based PA: Cost-Driven Price Rebound with Raw Material-Constrained Operation
Driven by tight o-xylene supply and rising costs, ortho-based PA prices in Jiangsu rebounded simultaneously, ranging from 9,800 to 10,250 yuan/ton. However, due to insufficient o-xylene supply, ortho-based PA producers have limited operation with declining capacity utilization. Procurement of o-xylene is mainly for rigid demand restocking with limited incremental demand, and the market is more driven by cost transmission rather than demand pull.
2.2 Naphthalene-based PA: Low-Price Substitution Effect, Indirectly Diversifying Ortho-based Demand
Since mid-to-late September, raw material industrial naphthalene prices have fallen rapidly, weakening the cost support for naphthalene-based PA and widening the price spread with ortho-based PA to 1,000 yuan/ton at one point. With low-price advantages, naphthalene-based PA has replaced part of ortho-based supply with better transaction performance. Prices of naphthalene-based PA in Hebei range from 8,800 to 9,100 yuan/ton. The substitution effect of naphthalene-based PA has diverted some terminal demand for o-xylene to a certain extent, slightly dampening its demand pull.
2.3 Terminal Plasticizers & Exports: Slight Overall Demand Improvement
In the terminal plasticizer sector, consumption of DOP and DBP has declined, but UPR (Unsaturated Polyester Resin) consumption has increased. Coupled with rising PA exports, overall PA consumption is assessed as positive growth, with the supply-demand gap narrowing from last week. Downstream acceptance of PA prices is fair, indirectly supporting rigid demand procurement of o-xylene and avoiding a sharp demand slump.
3. Market Outlook
Based on comprehensive analysis of cost, supply and demand, China’s o-xylene market is expected to maintain a firm upward trend in the short term. Strong cost support and supply contraction expectations are the core bullish factors, while demand is mainly supported by rigid demand with limited room for sharp gains. Overall, the market is prone to rises rather than falls.
