Introduction: At the beginning of the week, a rapid decline in octanol deepened corporate losses, intensifying industry willingness to cut production and support prices, which provided cost-side support for DOTP. However, persistently weak downstream demand made it difficult to secure new orders, creating resistance to any market rebound.

I. Octanol Production Cuts to Support Prices

The core feedstock octanol market recently displayed a pattern of "sharp price declines, corporate losses, and declining operating rates." Octanol prices fell significantly earlier this week, with ex-factory prices in Shandong dropping to the 7800-7900 yuan/ton range. The weekly average price was 7930 yuan/ton, down 670 yuan/ton or 7.8% from the previous week's average.

The core driver behind the octanol price decline was increased supply-demand pressure: since mid-May, previously idled octanol units have successively resumed production, coupled with stable operation of new units. This significantly increased market spot supply, with industry inventories gradually climbing. Under supply-demand imbalance, the market accelerated price reductions early this week, as producers attempted to attract buyers for restocking through price concessions to alleviate inventory pressure.

However, price cuts exacerbated losses for octanol producers. According to statistics from chempricehub, the theoretical weekly average profit for octanol in Shandong was -557 yuan/ton this week, a shift from profit to loss compared to last week, representing a sharp sequential decrease of 559 yuan/ton. To mitigate losses, some companies were forced to reduce operating loads, leading to a simultaneous decline in industry operating rates: this week's average octanol operating rate was approximately 78%, down 4 percentage points from last week. Looking ahead to next week, the operating rate is expected to further decline to 71%, a drop of 7 percentage points.

Table: Comparison of Weekly Average Operating Rates for Octanol and Downstream Products

| | Current Period | Previous Period | Change | Forecast for Next Period | Expected Change |
|---|---|---|---|---|---|
| Octanol Weekly Avg Capacity Utilization | 78% | 82% | -4% | 71% | -7% |
| DOTP Weekly Avg Capacity Utilization | 68% | 65% | 3% | 67% | -1% |
| DOP Weekly Avg Capacity Utilization | 56% | 56% | 0% | 59% | 3% |

The effect of production cuts to support prices is gradually emerging, leading to adjustments in the market spot supply pattern: currently, plants in the East China region have essentially no spot product available for sale. Under the tight supply situation, the price spread between East China and Shandong regions continues to widen, and the spot market negotiation focus is tending towards firmness. As the core feedstock for DOTP, the positive cost-side support from octanol is gradually transmitting, providing a certain floor for the currently weak DOTP market.

II. Geopolitical Risks Dominate; PTA Ranges and Consolidates

This week, the PTA market was caught between cost and demand pressures, exhibiting a volatile trend of "rising initially then falling back." As of May 22, the PTA market price was 9325 yuan/ton, down 190 yuan/ton or 3% from last Friday, with the price center of gravity notably lower than last week. The core logic behind the weakening PTA market was dual drag from insufficient cost-side support and weak demand. Upstream feedstock lacked sustained bullish drivers to effectively support PTA. Downstream demand was lackluster, with the polyester industry maintaining steady rigid demand but unable to provide upward momentum for prices, causing PTA prices to gradually retreat after a brief uptick.

Looking at next week's PTA supply side, the industry is currently in a maintenance cycle. Plant shutdowns for maintenance have led to significant supply compression. Coupled with expectations of further supply reductions next week, this will provide some price support. On the demand side, reciprocal tariff reduction policies may benefit the textile and apparel end-use sector, bringing potential benefits to industrial chain demand. Additionally, the polyester bottle chip sector has expectations for capacity utilization increases and new capacity release, which could drive marginal improvement in PTA rigid demand. The industry's supply-demand balance is expected to continue destocking. The PTA market is likely to maintain a range-bound consolidation trend next week. However, given its own constraints from supply-demand balance, its transmission support to the DOTP market will be limited.

III. DOTP Profit Margins Recover; Producers Active in Taking Orders

The feedstock side weakened simultaneously, with octanol and PTA prices falling and losses widening. The downward pressure on costs directly led to a synchronous decline in DOTP production costs, providing core support for profit recovery in the industry. As of Friday this week, the theoretical profit for DOTP in Zhejiang was approximately 124 yuan/ton. The industry's weekly average theoretical profit this week reached 125 yuan/ton, a substantial increase of 109 yuan/ton from last week's average profit of 16 yuan/ton, representing a sequential surge of 681%, indicating a significant profit recovery trend.

However, the core contradiction of weak DOTP market demand remains unresolved, continuing to suppress the market. Downstream end-users' procurement pace for new orders remained slow, with a low willingness for active restocking. Although some rigid demand buyers entered the market to restock at low prices mid-week, briefly boosting transactions of lower-priced goods, this was only a local and temporary phenomenon. The overall stimulus was limited, and the market lacked sustained momentum for a rebound. Persistent weakness in demand means DOTP prices lack significant room for upward movement. While early cost-side concession promoted industry profit repair, the sustainability of this profit improvement remains to be seen.

IV. Market Outlook

From a cost perspective, the overall sentiment in the feedstock market is relatively bullish, providing some positive support for the DOTP market. The core feedstock, octanol, faces prominent loss pressure, with increasing willingness among producers to cut production and support prices. Tightening supply expectations may drive a slight price rebound. As for PTA, despite expectations of declining operating rates in the downstream polyester industry, it is currently in a concentrated maintenance period. Spot supply continues to shrink, coupled with expectations of maintenance deferrals for some units. Additionally, reciprocal tariff reduction policies may benefit the textile and apparel terminal sector. Polyester rigid demand is temporarily stable, and the bottle chip sector has expectations for capacity utilization increases. Amid intertwined bullish and bearish factors, PTA prices are expected to maintain narrow-range fluctuations.

From the supply-demand side, although there is an expectation of a decline in DOTP industry capacity utilization, it will generally remain at a moderate level. Spot supply is ample in most regions, without forming supply-side tightening support. Downstream demand has yet to show a clear recovery. Market procurement mainly consists of periodic restocking at low prices, with transactions dominated by short-term, scattered orders. Overall trading lacks continuity, making it difficult to provide strong support for the market.

In summary, while there is a bullish expectation on the cost side providing some positive support to the market, the core pattern of a weak DOTP supply-demand fundamental remains unchanged. Upward market movement faces significant resistance, and a rebound is fraught with hurdles. The overall market for next week is expected to maintain a narrow consolidation trend with limited fluctuation. The mainstream price in the Zhejiang region is expected to operate within the 9000-9200 yuan/ton range. Focus will be on feedstock price trends and substantive downstream demand follow-through.