Lead: Since the latter half of July, feedstock phthalic anhydride has remained at high prices, increasing cost pressure in the DOP market and eroding profitability, with the market persistently operating in a loss-making zone. Multiple DOP units have cut output, and the capacity utilization rate once fell to as low as 47%.
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High Costs Drive DOP to Fluctuate at Elevated Levels
In the latter half of July, o-xylene route phthalic anhydride rose to above 9,000 yuan/ton. Combined with higher octanol prices, DOP costs climbed rapidly by 200 yuan/ton per day, while product prices only moved up by 50-100 yuan/ton per day, with losses deepening to 296 yuan/ton at that point. Driven by costs, prices in Jiangsu (similarly hereinafter) surged to the 9,000 yuan/ton mark by the end of July. However, the elevated prices proved difficult to pass down the supply chain, and high price levels lacked transaction support, so the rally was short-lived and market prices fell back again. Nevertheless, spot supplies of octanol and o-xylene route phthalic anhydride were limited, curbing feedstock price declines and leaving little room for cost concessions. The maximum loss in the DOP market once reached 506 yuan/ton. High costs suppressed the downside for DOP, and as of August 12, DOP prices were still fluctuating within the 8,700-9,000 yuan/ton range, with average profit at -385 yuan/ton.
Insufficient Profits Lead to Decline in DOP Capacity Utilization
Under loss-making conditions, multiple DOP units have reduced output, including Lanfan, Yimeide, and Weibo, while Hongbo, Libang, and Aojia Yongli have suspended production to varying degrees. Judging from the daily capacity utilization trend, the daily utilization rate remained at around 55% from late July to early August, then gradually declined to a low of 47%, approaching the 46% operating level seen during the Chinese New Year period. Although spot supply in the market was not abundant during this period, gradually declining new-order buying eased the sense of tightness. As Libang and Hongbo successively resumed production, the operating rate gradually rose to around 51%. Constrained by high feedstock prices and weak demand, the units that reduced output currently have no intention to increase production.
Demand Pressure Coexists with Cost Pressure
After octanol climbed to elevated price levels, trading sentiment weakened. With high-priced transactions facing resistance, spot availability increased slightly. However, turnaround news persists in the octanol market from August to October, limiting the growth in total spot supply and restraining the scope of any phased price pullbacks. Low-priced phthalic anhydride deals have been concluded, supporting a price rebound, but high-priced transactions have also slowed, with short-term prices still easing in phases. Overall, DOP market costs remain within a high range, and cost pressure stays significant.
Moreover, August remains an off-peak season for end-user consumption. After earlier orders, mainstream DOP plants are queuing up for deliveries, and most downstream users still have sufficient inventory. Market participants are cautious about chasing higher prices, maintaining only small-lot transactions for essential needs, so demand-side support remains somewhat insufficient.
At present, the DOP market bears the dual pressure of weak demand follow-through and high costs. However, inventory at mainstream plants is at medium-to-low levels, and cost changes currently have a stronger correlation with price movements. DOP market prices are expected to remain elevated for the time being, but should buying continue to soften, any price correction may be constrained by costs.
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