Introduction: Driven by rising costs, the market center of gravity for 2-ethylhexanol (EHA) has gradually rebounded. Following the National Day holiday, EHA manufacturers saw a steady decline in inventory levels, with a significant reduction in market supply observed in late October. Supported by both cost factors and fundamental supply-demand dynamics, the EHA market has maintained a high operating range.
This week, the domestic EHA market continued its upward trend, with ex-factory prices in Shandong rising to 9,400–9,500 RMB/ton, reaching previous year-to-date highs. This marks the third time this year that Shandong EHA prices have touched the 9,500 RMB/ton level, occurring in late March, mid-September, and mid-October respectively.
On the cost side, the feedstock propylene surged this week before entering a consolidation phase. High propylene prices provided strong cost support for EHA, leading to negative margins (cost inversion) within the industry. Additionally, expectations of reduced supply were a key driver behind this rally. While supply was ample and inventories accumulated in early October, Nanjing Chengzhi’s EHA unit underwent planned shutdown maintenance in mid-to-late October. This led to a decrease in local self-sufficiency rates in East China, signaling a clear contraction in overall domestic supply. Consequently, buyers engaged in moderate stockpiling ahead of schedule this week.
Table 1: Comparison of Operating Rates for Domestic EHA and Major Downstream Products
| Product | Last Week | This Week | Change | Next Week Estimated Operating Rate |
|---|---|---|---|---|
| EHA | 75% | 71% | -4 percentage points | 67% |
| DOP | 46% | 50% | +4 percentage points | 56% |
| DOTP | 55% | 56% | +1 percentage point | 62% |
| Isooctyl Acrylate | 49% | 49% | Flat | 49% |
From a supply-demand perspective, the EHA market is gradually shifting from weak to strong. This transition is driven by simultaneous supply contraction and demand recovery, significantly alleviating the previous supply-demand imbalance.
Current Week Analysis:
Supply declined as some EHA units reduced loads or shut down, causing the industry capacity utilization rate to drop by 4 percentage points week-on-week. Weekly output decreased accordingly, reducing available spot inventory for manufacturers and easing sales pressure. On the demand side, downstream plasticizer units resumed operations following the National Day holiday, with operating rates improving compared to the holiday period. This led to a corresponding recovery in procurement demand for EHA. Although downstream units have not yet fully ramped up, the offsetting effect of reduced supply and recovering demand has narrowed the supply-demand gap. The previously loose market situation has eased, strengthening the fundamental support for EHA.
Next Week Outlook:
The trend of supply contraction is expected to continue. Based on planned start-ups and shut-downs, EHA capacity utilization is projected to fall further below 70%, continuing to reduce weekly output and tightening spot market availability. Demand is expected to improve further; downstream plasticizers are maintaining reasonable profit margins, supporting positive operating enthusiasm. Units are likely to increase loads, restoring rigid demand for EHA. However, downstream buyers remain cautious regarding high-priced raw materials, sticking to rigid demand purchasing rhythms, resulting in moderate market activity.
After surging to high levels, propylene faces resistance to further gains, weakening its supportive impact on the EHA market. However, EHA fundamentals began strengthening in mid-to-late October. With anticipated supply reductions and demand recovery, the EHA market has entered a tight supply phase, where low manufacturer inventories provide price support. Since downstream buyers had already built up raw material stocks earlier, their willingness to accept high-priced EHA is limited, restricting the potential for further price spikes despite bullish quotes.
Conclusion:
With weakening cost support balanced against tight supply and demand dynamics, the EHA market is expected to maintain high-level volatility through late October. Key factors to watch include propylene price trends and the sustainability of downstream restocking.
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