Introduction: In early June, the decline in raw material propylene prices slowed, while the bottom price of octanol gradually moved upward. Due to persistent industry losses, the operating rate of octanol capacity continued to decrease. Domestic demand remained lackluster, yet stronger export orders became one of the key factors driving the rebound in the octanol market.

I. Slow Decline in Octanol Production Costs

Table 1: Summary of Propylene and Octanol Prices in Shandong (Unit: RMB/ton)

| Product | Region | 5/29 | 6/5 | Change | Change (%) |
|---------|--------|------|-----|--------|------------|
| Propylene | Shandong | 9,110 | 8,950 | -160 | -1.76% |
| Octanol | Shandong | 7,850 | 8,000 | +150 | +1.91% |
| Data source: chempricehub | | | | | |

This week, the bottom price of the octanol market gradually moved higher. By Friday, the ex-factory price in Shandong had risen to 8,000 RMB/ton, up 150 RMB/ton from the previous Friday. The price of raw material propylene declined slowly, reaching 8,950 RMB/ton in the Shandong market, down 160 RMB/ton week-on-week. During the week, the main downstream plasticizer market saw phased transactions, boosting buyers' enthusiasm for purchasing spot octanol. Additionally, export orders provided support early in the week, allowing the market center to rise slowly. Downstream users maintained a just-in-time purchasing pace for high-priced octanol, and the atmosphere for new order negotiations was lukewarm. Supported by contracts and export orders, producers' offers remained firm.

II. Persistent Industry Losses Drag Down Plant Operating Rates

Since May, the octanol industry has entered a loss-making state overall, with the loss period exceeding one month. Recently, the octanol market center saw a slight rebound, but the increase was limited and had little effect on alleviating cost pressures. Meanwhile, the slow decline in raw material propylene prices further exacerbated the cost burden for octanol producers. Under these dual pressures, it is difficult for octanol cost pressures to ease significantly in the short term, reducing producers' willingness to operate at high rates.

Affected by high costs, the operating rate of octanol plants has been declining continuously. As of this weekend, the operating rate of domestic octanol plants had fallen to around 65%, a periodic low. The decline in operating rates led to noticeable production losses, and the impact of reduced supply on the market is gradually emerging. Currently, with octanol factories prioritizing supply to contract customers, the available spot resources are limited. As corporate inventories are gradually drawn down, the overall industry inventory level is showing a downward trend. With tightening supply on the octanol side and ongoing cost pressures, the loss-making situation has not fundamentally improved. In the short term, the industry's plants are expected to maintain a medium-to-low load operation.

III. Domestic Demand Lukewarm; Export Orders Become a Key Factor in Octanol Market Rebound

From the perspective of domestic downstream demand, the performance of the main downstream plasticizer industry for octanol has been lukewarm and unable to provide strong support for octanol. Although DOP products maintain marginal profitability, DOTP product prices remain below cost. As a result, the overall operating rate of plasticizer plants remained at a medium level, and downstream users adopted a cautious "sell-first, buy-later" strategy for spot octanol. In the early part of the month, most downstream enterprises prioritized fulfilling raw material contracts and showed little willingness to increase spot raw material positions, thereby limiting spot octanol circulation and market rebound potential. The cost inversion for 2-ethylhexyl acrylate was relatively severe, leading to a significant drop in the operating rate of plants producing this product and a corresponding reduction in demand for octanol. Overall, domestic demand for octanol downstream remained weak, lacking sustained momentum for spot octanol purchases.

In contrast to weak domestic demand, export orders provided support. Currently, Chinese octanol prices are at a relatively low level in the international market, giving export costs a clear advantage. At the same time, supply from regions such as Taiwan (China), Japan, and South Korea has declined, creating more market space for Chinese octanol exports. This year, China has seen additional octanol capacity come on stream, making the overall domestic market supply relatively ample. As domestic octanol prices have gradually stabilized recently, foreign buyers' purchasing interest has recovered, and export inquiries and orders have increased. In June, domestic octanol continues to be supported by export orders, which to some extent alleviates the pressure from insufficient domestic demand and becomes one of the main factors stabilizing and driving the rebound in the octanol market.

In summary, the current demand side of the octanol market shows a divergence: weak domestic demand but relatively acceptable external demand. From June to August, entering the traditional off-season for demand, domestic demand is unlikely to see significant improvement in the short term, limiting the upward potential for octanol prices. However, supported by export orders and the prolonged low-load operation of industry plants, the bottom support for the octanol market is gradually strengthening. Going forward, as raw material propylene prices continue to decline and the octanol market center rebounds, the industry's loss-making situation is expected to narrow, and the operating rate of octanol plants is expected to recover somewhat.