Introduction: The price of feedstock octanol has been fluctuating at elevated levels, while demand for DOP has weakened, lacking buying support. Amid the tug-of-war between cost pressure and demand, prices have continued to oscillate within a range, gradually squeezing profit margins.

Weak Demand Leads to Range-Bound DOP Prices

Since the beginning of the month, DOP market prices have shown a downward trend. As of April 22nd, the delivered price in the Jiangsu market was RMB 10,100/ton, a decrease of 3.35% compared to the end of March.

Following the high volatility in March, April's price adjustments have gradually returned to being influenced by supply and demand fundamentals. Coupled with fluctuations in PVC prices during the month, new order placements from end-users have gradually weakened, with operating rates and demand declining. Buyers have adopted a cautious stance, maintaining small-volume purchases for essential needs. Consequently, trading volume in the DOP market has gradually decreased, making it difficult to sustain high prices. However, due to significant cost pressure, market prices have been oscillating within the range of RMB 10,100-10,200/ton since mid-month.

Slow Concessions on Feedstock Squeeze DOP Profit Margins

Recently, the price of feedstock octanol in the Shandong market has fluctuated within the range of RMB 9,000-9,200/ton. Meanwhile, the price of ortho-phthalic anhydride (OPA) has remained persistently high. Although the price of naphthalene-based phthalic anhydride (NPA) has fallen, the DOP market still faces high cost pressure. As of April 22nd, the monthly average profit for DOP in the Shandong region has dropped to around RMB 153/ton, with daily profits showing a continuous downward trend, currently reduced to RMB 34/ton. The decline in feedstock market prices has been slow. However, since mid-month, DOP transactions have continued to weaken. Under a market pattern where major suppliers continue to offer concessions to promote sales, DOP profit margins still show signs of further compression.

Declining Profits Gradually Impact DOP Operating Rates

In March, with relatively favorable profit levels, DOP capacity utilization rates mostly operated stably between 65-68%. As profit margins gradually declined in April, multiple plants reduced production, including Yimeide, Zhenjiang Li Cheng, Zhejiang Hongbo, and Lanfan. Following the shutdown of the Haiyou plant in mid-month, DOP capacity utilization fell to around 55%, prompting the market to begin digesting inventories in some regions. Although operating rates recovered to around 60% after idled plants resumed production, with further compression of profit margins expected, capacity utilization is projected to potentially drop to the 50-55% range. However, inventory levels remain high in some market regions, indicating that supply remains ample.

Approaching May Day Holiday, DOP Still Faces Sales Pressure

From the perspective of the feedstock market, the phthalic anhydride market shows a trend of increasing inventory, with sluggish high-price transactions, suggesting further potential price declines. Although octanol prices are stable, at current levels, plasticizer plants are already showing resistance to buying, and the octanol market also has expectations of price reductions to boost sales. A slight downward shift in DOP costs may provide some room for price adjustments.

With only six working days left before the May Day holiday, DOP market supply remains ample. To alleviate inventory pressure during the holiday period, major DOP suppliers still have a need to actively destock and advance shipments. However, current new order increments from end-users are insufficient, with demand for plasticizers declining significantly. Furthermore, some users also have plans for holiday shutdowns, potentially reducing pre-holiday stocking activities. Overall, the DOP market faces considerable sales pressure. Against the backdrop of weak demand support, DOP market prices are likely to show further signs of softening.