Bullish Phthalic Anhydride Market: European & US Perspectives

Cologne, Germany: The Phthalic Anhydride market witnessed an incline in March 2024 in the European as well as the US markets, due to the heightened demand from the downstream Plasticizers market and the increase in the consumption rate of the existing inventories which led to lower inventory levels. Additionally, the ongoing farmer's dispute in European countries caused delays in the arrival of supplies, leading to a shortage and subsequent price increases in Phthalic Anhydride as the balance between supply and demand was disrupted.

In the German market, the prices of Phthalic Anhydride experienced an incline of 2.89% and settled at USD 1350/MT (FCA-Cologne). The supply faced shortages due to disruptions in the supply chain caused by ongoing Farmer’s protests blocking roads and causing logistical issues. Additionally, a rail strike initiated by the Union of German Train Drivers, stemming from a dispute with Deutsche Bahn over weekly working hours commenced on 6th March 2024 and further impacted cargo logistics, worsening the situation in the Phthalic Anhydride market. This strike resulted in disruptions and delays in rail transportation during a period of deficit in the Phthalic Anhydride market, aggravated by a shortage of material in certain regions of northwest Europe. Moreover, Evonik, a major German company, announced workforce reductions. In terms of feedstock markets, Ortho-Xylene prices rose while Naphthalene prices fell. Concurrently, the upstream Crude Oil prices increased, leading to higher energy costs and consequently raising production expenses for commodities like Phthalic Anhydride. As a result, this surge in production costs translated into higher prices for Phthalic Anhydride. The elevated demand from the downstream Plasticizer sector surpassed the existing inventory levels, prompting heightened trading activities from the German market to overseas markets.

Similarly, in March 2024, the US market also showcased an upward price trend marked by a 0.52% increase in prices. This surge was primarily driven by heightened demand from downstream industries such as Plasticizers and Polyester resin manufacturers. In terms of feedstock markets, o-xylene prices rose, aligning with the upward trend in Phthalic Anhydride prices. Conversely, Naphthalene prices remained the same as the previous week, but the overall impact on Phthalic Anhydride production costs was balanced by these opposing trends in feedstock prices. Furthermore, the surge in Crude Oil prices in the upstream market resulted in increased energy costs, further contributing to the rise in operating costs for Phthalic Anhydride production. Regarding market spread, the difference between Phthalic Anhydride, Naphthalene, and o-xylene widened, indicating a bullish market scenario for the product.

As per ChemAnalyst, the prices of Phthalic Anhydride are anticipated to incline in the upcoming weeks due to the expected increase in the demand from the downstream Plasticizers markets and the disruptions in Phthalic Anhydride supplies are anticipated to escalate further.