Lead: Since the second half of May, feedstock n-butanol has seen production cuts to support prices, while terminal demand remains persistently weak. The DOTP industry is facing a severe cost-demand dilemma, with theoretical profit margins gradually being squeezed, turning from profit to loss by the end of the month. For instance, in the Zhejiang region, the industry's theoretical loss currently stands at 31 CNY/ton.

I. N-Butanol Supply Declines, Underpinning Low Prices

Table: Domestic N-Butanol Weekly Supply-Demand Balance Sheet

| Data Type | May 22-28 | May 15-21 | Change | Change (%) | Next Trend |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Production | 6.34 | 7.26 | -0.92 | -12.67% | ↘ |
| Consumption | 6.50 | 7.40 | -0.90 | -12.16% | ↘ |
| Weekly Surplus/Deficit | -0.16 | -0.14 | -0.02 | | |

Source: chempricehub

Since May, losses in the n-butanol industry have continued to escalate. Producers' willingness to operate has declined, leading to successive production cuts to support prices, with plant operating rates falling for four consecutive weeks. According to chempricehub, domestic n-butanol production this week reached 63,400 tons, a decrease of 9,200 tons from the previous week. The average weekly capacity utilization rate dropped to 68%, down by 10 percentage points from the prior week.

Downstream demand also weakened in tandem. N-butanol consumption this week stood at 65,000 tons, a decline of 9,000 tons from the previous week. The industry's weekly supply-demand gap was -1,600 tons. Inventories have been steadily absorbed, slightly alleviating market surplus pressure. With both supply and demand contracting, spot market sales pressure has eased somewhat, but the overall pace of inventory destocking remains slow.

Downstream plasticizer sales are encountering obstacles, with weak purchasing sentiment and a sluggish trading atmosphere. After intermediaries completed short-covering, high-end product transactions were sluggish, putting downward pressure on high-priced offers. The n-butanol industry remains deeply in the red, with an average weekly loss of 579 CNY/ton. Producers lack the willingness to lower prices. Tightened supply, combined with cost-floor support, has limited the downside for n-butanol prices. Spot prices were generally range-bound this week, making it difficult for the DOTP industry to relieve cost pressures in the near term.

II. PTA Falls Then Rebounds Amid Fluctuating Iran-US Talks

Geopolitical negotiations remain a tug-of-war, while risks related to strait shipping are gradually cooling down. Recently, the PTA market has shown divergent trends. At the beginning of the week, international crude oil prices dropped sharply, weighing on the cost side and directly suppressing PTA market sentiment. In the latter part of the week, geopolitical risks briefly escalated again, pushing up feedstock costs. This event, coupled with expectations of tighter supply tightening spot liquidity, drove a price rebound. Over the week, PTA was influenced by alternating factors including crude oil, geopolitical developments, and supply-demand expectations, leading to a decline first and then a recovery.

III. DOTP Producers Turn from Profit to Loss, Cautious on Concessions

Looking at the feedstock side for DOTP, n-butanol producers have cut output to support prices, limiting the scope for price declines. Meanwhile, PTA is undergoing volatile consolidation, keeping cost pressure constant on DOTP. On the demand side, the prolonged weakness in DOTP demand has seen no substantive improvement. As the traditional off-season of June-July approaches, market participants lack confidence in the outlook. Downstream procurement remains limited to essential needs, failing to provide effective support.

On the supply side, although output has declined this week, it remains above the level for the same period in the past three years. While some regions have experienced tight supply due to short-term inventory constraints, most producers are facing sluggish sales, leading to gradually accumulating inventory pressure.

Due to the low degree of product differentiation in the DOTP market, producers generally lack core competitive advantages. In the current oversupply environment, price competition has become the primary means of rivalry. In the scramble for limited orders, low prices are frequently seen in the market, further dragging down the overall price level. Under the twin pressures of limited cost declines and weak demand, DOTP producers' profits have contracted rapidly, turning from profit to loss.

Using Zhejiang as an example, the current theoretical loss for DOTP stands at 31 CNY/ton, a decline of nearly 200 CNY/ton from the mid-month peak, turning the market to a loss at the end of the month. Under the pressure of losses, DOTP producers are becoming cautious about offering further discounts, leading to a more entrenched stalemate and wait-and-see attitude in the market.

IV. Market Outlook

From the feedstock cost perspective, domestic demand for n-butanol is weak, and high-priced materials are struggling to find buyers, limiting upward price momentum. However, the industry is currently facing significant cost inversion, combined with an increase in export orders, which provides clear support for n-butanol at low prices. On the other hand, the PTA market is expected to see increased supply and weaker demand, limiting its price upside. The divergent trends of the two key feedstocks create a mixed cost outlook for DOTP, which is unlikely to provide strong support to spot prices.

From the supply-demand perspective, the DOTP industry is currently maintaining moderate operating rates, with no significant contraction on the supply side. The downstream market is gradually entering the traditional off-season, with persistently weak purchasing sentiment among end-users and quiet new order negotiations. The current demand weakness will continue to weigh on the market. However, with DOTP prices already near the cost line, producers are feeling the pressure of losses, and their willingness to proactively cut prices and offer concessions has notably weakened.

In summary, the DOTP market currently lacks effective cost support, and combined with the ongoing weakening of demand, the market is under overall pressure, making it more difficult to transact for high-priced materials. Constrained by the cost floor, the DOTP industry has limited room for further price reductions in the short term, and the market is likely to maintain a weak, volatile pattern.