Introduction: The current DOTP market is operating under the ongoing tug-of-war between cost support and weak demand, with significant intensification of profit pressure across the industry. Companies are already on the brink of losses. Taking the Zhejiang region as an example, the theoretical daily profit for DOTP producers has dropped to 42 yuan/ton. The weekly average profit this week stands at 158 yuan/ton, marking a sharp decline of 48.70% week-on-week, indicating continuously compressed profit margins.

I. Narrow but Firm Price Trend for Feedstock 2-Ethylhexanol (Octanol)

Recently, the operating rate of octanol plants has slightly declined. Maintenance shutdowns at the Shandong Dongming Dongfang and Lanfan plants have led to a 3-percentage-point drop in the weekly operating rate to 90%, tightening market supply. Although the operating rates of downstream plasticizer plants have also decreased synchronously, showing a weakening trend on both supply and demand sides, the price of upstream propylene rose during the week, increasing cost pressure for octanol producers. Concurrently, some octanol plants are still fulfilling previous export orders, and the delivery pace has provided support for quotations, leading to an upward adjustment in producer offers.

Overall, despite lackluster performance on the demand side, multiple factors including supply contraction, rising costs, and export deliveries have collectively driven the octanol market to maintain a relatively strong trend. As of now, the market price for octanol in Shandong is referenced at 9,200 yuan/ton, an increase of 200 yuan/ton or 2.22% compared to Monday.

II. Feedstock PTA Prices Consolidate at High Levels

Despite a pullback in international crude oil prices at the beginning of the week due to eased tensions in the Middle East, leading to a slight decline in PTA spot prices under cost pressure, prices subsequently rebounded as the market supply-demand structure gradually improved. Specifically, PTA spot supply has continued to decline recently, while downstream demand has remained generally stable. The market balance is gradually shifting towards a destocking pattern, providing strong support for prices. Simultaneously, reduced supply in the feedstock sector has pushed up price levels, further warming sentiment in the PTA spot market. Driven by both improved supply-demand dynamics and cost support, PTA spot prices in East China have steadily rebounded. As of now, PTA spot prices are quoted at 6,570 yuan/ton, an increase of 295 yuan/ton or 4.70% from the beginning of the week. In summary, although costs weakened initially, supply contraction, stable demand, and subsequent strength in feedstock prices have collectively driven a significant upward shift in the PTA market center, demonstrating strong price resilience.

III. Theoretical Profit Margin for DOTP Producers Narrows

DOTP prices have currently reached near two-year highs, with significantly limited acceptance from downstream enterprises. Support from the cost side has been insufficient to effectively offset the negative impact of weak demand. In the dual pressures of cost and demand, the profit margin for DOTP producers has been continuously compressed, now fluctuating near the cost line, ending a nearly three-month period of high profitability.

Looking across the industry chain, the most profitable segment remains feedstock octanol. Due to tight spot supply in the market, octanol prices have received effective support, maintaining relatively high levels and allowing it to retain the highest profit margin within the chain, forming a stark contrast with the profit performance of downstream products.

Amid the ongoing contest between cost and demand, the profit margin in the DOTP market has gradually narrowed. In terms of weekly average profit, the theoretical profit in the Zhejiang region dropped to 158 yuan/ton this week, a decrease of 150 yuan/ton or 48.70% week-on-week. As of today, the theoretical profit has further declined to 42 yuan/ton, down 83% from 253 yuan/ton at the beginning of the week.

Currently, DOTP producers are deeply entrenched in an intense tug-of-war between cost and demand: On one hand, downstream demand remains weak, with buyers adopting a cautious stance, maintaining only essential procurement under the current high-price environment. The DOTP market lacks sustained transactional support, leading to sluggish sales for merchants and increasing shipment pressure. On the other hand, supply for both feedstock octanol and PTA has contracted, with prices remaining relatively high. DOTP producers face significant resistance in passing on costs downstream, resulting in continuously squeezed profit margins.

IV. Market Outlook

From the cost perspective, expectations remain for a further reduction in the operating rate of DOTP's core feedstock, octanol, suggesting the continuation of industry supply contraction. Simultaneously, geopolitical uncertainties persist, with upstream feedstock propylene prices expected to fluctuate within a range. The dual pressures of cost and supply contraction provide strong underlying support, offering a solid floor for the octanol market. The other feedstock, PTA, also shows relative strength, with clear expectations of reduced supply and some support from the cost side. The PTA market is expected to continue its strong, fluctuating trend. Under the positive transmission from both feedstock markets, the overall cost side for DOTP retains a supportive foundation, effectively limiting its downside price potential.

Regarding supply and demand, there are no substantial signs of improvement in DOTP market demand. Downstream enterprises remain cautious in procurement, primarily engaging in periodic replenishment at low prices, lacking sustained and stable transactional support. This situation significantly drags on any potential upward movement in DOTP prices. However, current profit margins for DOTP producers have been compressed to low levels. Against the backdrop of high cost pressure, merchants have very limited room for further price concessions to promote sales, which also serves as a crucial supporting factor preventing prices from continuously declining.

In summary, the short-term DOTP market is caught in a persistent stalemate between cost-side support and demand-side weakness. Positive factors on the cost side provide a strong floor for prices, while weak demand constrains upward price movement, significantly limiting the market's range of fluctuation. Furthermore, multiple uncertainties such as geopolitical volatility and fluctuating feedstock prices continue to influence market expectations, intensifying the prevailing wait-and-see sentiment. However, considering that downstream essential demand still shows willingness to absorb low-priced material, which can provide effective market support, it is anticipated that the short-term DOTP market will primarily experience narrow consolidation, with prices likely to maintain range-bound fluctuations.