Lead-in: DOP prices have repeatedly hit new highs and are currently trading in a high range. However, downstream users lack the capacity to absorb these costs, resulting in poor cost pass-through. As industry output increases, profit margins continue to compress, creating a divergence between rising volumes and declining profits.
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Since mid-October, international crude oil prices have entered a sustained period of high-level volatility. Rising costs on the supply side drove up prices for key raw materials such as propylene and 2-ethylhexanol (octanol). Supported by persistent increases in raw material costs, DOP market prices also trended upward with fluctuations. In the Jiangsu region, delivered prices briefly surged to 11,400 RMB/ton, setting a new regional high for the past two years.
In the early stages of this price rally, market sentiment was bullish. End-use product manufacturers and traders took advantage of the situation to conduct phased restocking, leading to an increase in market transactions and a temporary release of trading volume. However, as prices continued to climb, end-users who had previously restocked found their inventories gradually sufficient, causing procurement demand to cool significantly. At these elevated price levels, the closing of new orders slowed down. Downstream product manufacturers showed limited acceptance of high-priced raw materials, hindering the transmission of DOP's high prices to the final product segment. Market follow-through意愿 remained weak, making it difficult to finalize high-price orders. Consequently, the overall trading atmosphere weakened, and transaction performance remained sluggish.
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After raw material price hikes pushed up DOP quotations, production enthusiasm within the industry increased, and plant operating rates rose. Capacity utilization, which had been running at a low level of 44% following the National Day holiday restart, gradually recovered to 62% by the end of the month, thereby increasing market supply. However, constrained by poor cost pass-through to downstream sectors, the increase in DOP selling prices failed to fully cover the rise in costs for octanol and phthalic anhydride. Taking the Shandong market as an example, DOP profit margins stood at 300–400 RMB/ton after the post-holiday return but dropped to approximately 100 RMB/ton in late October and further plummeted to just 7 RMB/ton by early November.
Although production volumes increased month-on-month, DOP gross margins continued to be squeezed, resulting in an industry pattern characterized by higher output but lower profits. Amidst weak transactions at high prices, manufacturers' shipping pace slowed, leaving them under significant cost pressure.
Currently, high octanol costs and a shortage of ortho-xylene supply will continue to exert cost pressure on the DOP market. However, downstream product industries operate with thin profit margins and have limited capacity to absorb high-priced raw materials, making cost transmission to the downstream sector still difficult. Market demand lacks support from end-user buying. Under conditions of high costs and insufficient demand, some DOP plants may reduce production, potentially leading to tighter capacity utilization.
While cost support remains present in the current DOP market, limiting room for price concessions, weak demand and efforts to facilitate shipments may put short-term downward pressure on market prices. A narrow range of price adjustments is possible, where slight discounts might encourage some buyers to enter the market and close deals. The crude oil market continues to exhibit strong volatility and uncertainty; therefore, future market trends require close observation of crude oil price fluctuations and the resulting shifts in market procurement sentiment.
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