Introduction: In the second quarter, the center of gravity of the octanol market fluctuated downward. As of June 26, the highest ex-factory price of octanol in Shandong was 9,400 yuan/ton, appearing in early April, while the lowest ex-factory price was 7,400 yuan/ton, appearing at the end of June.

1. Domestic octanol market center of gravity fluctuated downward

In the second quarter, the average price of the domestic octanol market was 8,447 yuan/ton, up 13.75% from the first quarter. The high point of the octanol market in the second quarter occurred in early April, which was also the high point of the first half of the year. Influenced by the US-Iran situation, domestic octanol market prices were pushed to high levels in March, and demand was also driven by rising raw material prices. However, entering the second quarter, the sustainability of domestic octanol market demand was poor, and downstream users developed resistance to high-priced raw material octanol. The increase in exports to some extent slowed the decline rate of the domestic octanol market. The cost side and the supply-demand side jointly influenced the market trend in the second quarter. Against the backdrop of a significant increase in costs, although downstream demand increased, the octanol market saw an even more pronounced oversupply pattern due to new capacity coming online, leading market participants to compete in pricing. At the end of the second quarter, international crude oil and raw material propylene prices dropped sharply, causing the octanol market to lose cost support and gradually decline.

2. Sharp decline in octanol profits in the second quarter

Comparison of gross profit of octanol in the first and second quarters of 2026 (yuan/ton)

| Indicator | First Quarter | Second Quarter | Change | Change (%) |
| --- | --- | --- | --- | --- |
| Average propylene price | 6,933 | 8,960 | 2,027 | 29.24% |
| Average octanol price | 7,426 | 8,447 | 1,021 | 13.75% |
| Average gross profit | 552 | 55 | -497 | -90.04% |

From the perspective of the main raw material propylene price, the average propylene price in the second quarter increased by 2,027 yuan/ton, and the raw material cost of octanol increased by about 1,460 yuan/ton, while the average ex-factory price of mainstream octanol only increased by 1,021 yuan/ton. This shows that the increase in octanol prices failed to keep pace with the increase in raw material costs, and the average gross profit fell to 55 yuan/ton, down 497 yuan/ton from the first quarter. Due to the lackluster performance of downstream plasticizer demand, downstream users resisted high-priced octanol, and buyers held the dominant position. The transmission of high-priced octanol downstream faced certain resistance, making it difficult for the increase in octanol prices to catch up with the increase in costs.

3. Domestic production decreased quarter-on-quarter, demand increased quarter-on-quarter

In the second quarter, 610,000 tons of new octanol capacity came online in China, with new units gradually starting production in late April. Production of octanol saw a significant increase from late April to early May. However, due to serious price inversion for octanol, multiple octanol units in China successively reduced production or shut down in May, resulting in large maintenance losses in May and June. Therefore, although octanol capacity increased, domestic octanol production in the second quarter reached 910,000 tons, a decrease of about 60,000 tons from the first quarter, and production in June fell to a low point for the first half of the year. Imports decreased compared to the first quarter, with second-quarter imports estimated at around 15,000 tons.

Domestic consumption of octanol in the second quarter was 870,000 tons, an increase of about 20,000 tons from the first quarter. Exports increased to 110,000 tons. On one hand, this was due to the sharp rise in international crude oil, leading to significant increases in energy and raw material prices in Europe, Southeast Asia, Northeast Asia, etc., making octanol production costs uncompetitive and affecting plant operations. On the other hand, due to the blockade of the Strait of Hormuz, octanol transportation in the Middle East was hindered, creating more export opportunities for Chinese octanol. Overall, the Chinese octanol market was in a gradual destocking phase in the second quarter.

4. Third-quarter octanol market under pressure

July and August in the third quarter are the traditional off-season for plasticizer demand. Plasticizer plant operating rates are expected to remain at moderate levels, and downstream users are unlikely to engage in concentrated procurement, maintaining just-in-time purchases of raw material octanol. Due to improved profitability, octanol plants ramped up production at the end of June, and output in July will be released to the market. Supply will significantly exceed domestic consumption, leading to ample market inventory and renewed competitive pressure.

Raw material propylene prices are gradually declining. Lacking support from upstream and downstream, the octanol market price will gradually return to the cost line, and once again falling into a loss-making state may become the norm. The profitability or price inversion level of factories will become an important reference for the downside potential of octanol market prices.

The biggest uncertainty in the third quarter lies in changes on the supply side. If octanol prices fall deeply below the cost line, it may once again trigger plant load reduction or shutdowns, leading to a temporary rebalancing of market supply and demand, and thus creating opportunities for price overshoot rebound.