Introduction
Entering September, the price spread between domestic isopropanol and its feedstock, acetone, narrowed significantly. Driven by rising costs, the price of isopropanol climbed from 7,425 yuan/ton at the end of August to a peak of 9,250 yuan/ton. During the same period, acetone prices surged more sharply, rising from 7,125 yuan/ton to a high of 9,350 yuan/ton. Consequently, the price gap between the two products dropped rapidly from its previous high to just 100 yuan/ton, reaching historically low levels. As acetone price increases continued to outpace those of isopropanol, profit margins for producers using the acetone route were severely compressed, pushing the sector into deep losses. However, due to weak market trading activity and limited transactions at elevated prices, isopropanol prices gradually retreated from their highs.
1. Acetone Price Gains Outpaced Isopropanol, Compressing Spread to Lows
In early September, the acetone market was supported by strengthening international crude oil prices. Upstream raw materials benzene and propylene saw significant price hikes. Coupled with tight spot availability and strong reluctance among holders to sell (leading to firm pricing), the center of gravity for acetone spot prices continued to rise. Meanwhile, facing intense cost pressure, isopropanol producers raised their offered prices consecutively, with negotiation prices in Jiangsu Province hitting a monthly high of 9,350 yuan/ton.
However, following this rapid price escalation, downstream resistance to high raw material costs became increasingly apparent. Actual orders remained limited, and transaction volumes failed to expand, resulting in weak substantive support for the market trend. Overall, lacking solid transactional backing, the market exhibited a pattern of "price rises without volume."
2. Diverging Feedstock Trends Lead to Split Profitability Across Production Routes
Regarding industry profitability, the divergent trends in feedstock prices led to a significant split in profits between the two isopropanol production routes. Currently, losses for plants using the acetone route continue to widen, with theoretical profit margins falling to year-to-date lows. Primarily driven by sustained high acetone prices, cost pressures on acetone-route producers have intensified, further expanding industry losses. The current theoretical profit margin stands at -750 yuan/ton, a relatively low level for the year. Persistent losses have forced some companies relying on externally sourced acetone to shut down operations for extended periods, thereby suppressing overall industry operating rates.
In contrast, profitability for plants using the propylene route remains optimistic. Profits have gradually recovered alongside rising isopropanol market prices, with the current theoretical profit margin standing at 860 yuan/ton. This resilience is mainly attributed to relatively stable propylene prices, which keep cost structures manageable. Furthermore, as isopropanol market offers continued to rise, profit margins for propylene-route producers have been progressively repaired.
3. Demand Fails to Improve; Market Trading Activity Remains Quiet
From the perspective of downstream consumption structure, after isopropanol prices surged above 9,000 yuan/ton in early September, downstream users generally adopted a "buy-as-needed" strategy, showing extremely low willingness to build inventory proactively. Combined with high feedstock costs, terminal factories faced squeezed profit margins from both ends, creating a negative feedback loop where demand existed but showed no incremental growth.
In the export market, total isopropanol exports from January to July amounted to 109,000 tons, representing a year-on-year increase of 34.13%. However, monthly export data exhibited significant volatility. In April and May, export offers rose in tandem with increasing crude oil and acetone prices, leading to a spike in April’s single-month export volume to 29,300 tons. From June to July, volumes gradually declined, stabilizing around 12,000 tons per month.
Southeast Asia remains the primary destination for Chinese isopropanol exports, supported by essential demand from local electronics manufacturing and daily chemical industries. However, local downstream buyers have limited acceptance of high-priced isopropanol. Once domestic prices rise too sharply, buyers shift procurement to other regions, leading to a decline in China's export volumes.
4. Market Outlook
Comprehensively considered, the isopropanol market is entering a phase of tug-of-war between costs and demand, with prices likely to fluctuate within a specific range. While the cost side currently provides support, momentum for further price increases is insufficient. On the demand side, pre-holiday stocking needs before the upcoming National Day and Mid-Autumn Festival holidays may boost transaction volumes. There is an expectation that transactions involving lower-priced goods might improve, providing support for the market floor. Moving forward, close attention should be paid to fluctuations in feedstock prices and the pace of downstream demand recovery.
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