Phthalic  anhydride  margins  surged  to  a  five-year  high  of $131/mt CFR  China last Friday 

after an end-year surge in demand for PA to make dioctyl phthalate. 

The last time PA margins were higher was June 21, 2012, at $154/mt CFR China, S&P Global 

Platts data showed. 

PA is made from orthoxylene and its breakeven is calculated as 0.95 of the prevailing price of 

OX  plus  $100/mt  production  costs, putting  the  minimum  spread to OX for PA producers to

break even at $105.30/mt. 

Margins  have  been  mostly  in negative territory since the last quarter of 2012 and flipped to 

positive only last October, Platts data showed. 

Market participants attributed the flip to positive to strong demand for PA in late 2016 to make 

downstream  DOP  amid  expectations  of a rise in DOP prices  at the end of the year. Low PA 

inventories were also cited as a factor. 

Also  naphthalene-based  PA  plants  in  China  cut  operating  rates in the second half of last 

year amid a clampdown on adherence to environmental regulations ahead of the G20 summit 

in Hangzhou, exacerbating already tight supply. 

Naphthalene  is  an  alternative  feedstock  used  to  make PA that is  typically preferred as it

is cheaper than OX. 

OX  prices  surged  last  October  amid  the  strong  demand  for  PA  and  continued  to rise 

throughout the fourth quarter amid stockpiling ahead of the Lunar New Year holidays. 

OX was assessed at $820/mt CFR China last Friday, up from $705/mt at end September.