Lead: Driven by a sharp increase in raw material propylene prices, the focus of the octanol market continued its upward trend this week. However, as the price increase lagged behind the cost rise, the losses for octanol intensified over the week. Industry capacity utilization further declined. Due to the lack of a substantial improvement in end-user demand, the boost in market confidence from rising costs was limited.
Raw material propylene prices surged significantly at the beginning of the week, causing severe losses for octanol production. Based on spot propylene prices, losses in the Shandong region reached nearly 1,000 yuan/ton. Driven by rising propylene prices, octanol market prices slowly increased, simultaneously boosting downstream plasticizer prices and trading volumes. Due to the slow pace of the octanol market increase, losses this week widened compared to last week, with average weekly losses reaching 811 yuan/ton. Facing severe losses, octanol manufacturers had a strong willingness to hold prices. Some producers limited spot sales—except for contracted customers—and offered higher quotes to other buyers, providing strong support for the upward price trend this week.
Profitability for downstream plasticizer products improved. DOP and DOTP earned profits of 335 yuan/ton and 130 yuan/ton, respectively. With profit margins, plasticizer plants maintained stable operations, and plants that had previously undergone maintenance resumed production this week.
Looking at operating rates of octanol and downstream facilities, current octanol plant utilization is around 70%, which is relatively low for the year. To reduce losses and spot sales pressure, multiple units across various regions have reduced output. Specifically, octanol plant operating rates in Shandong fell to about 61%, and in East China to about 66%. These operating rate cuts primarily serve contract customers, resulting in lower spot sales pressure.
Major downstream plasticizer plants are operating at around 60% capacity, a moderate level. The isooctyl acrylate industry, suffering from severe cost inversion, has a low capacity utilization rate, currently below 50%. From the perspective of octanol output and downstream consumption, the market is currently in a relatively balanced supply-demand state. Downstream users actively purchased low-cost raw materials earlier, improving short-term market demand. However, since end-user demand is still in the traditional off-season, with no fundamental improvement, buyers are cautious about chasing high-priced spot octanol, and spot trading sentiment has weakened.
As of this Friday, ex-factory octanol prices in Shandong had risen to 7,300 yuan/ton, an increase of 400 yuan/ton from last Friday. Major downstream plasticizer products saw concentrated transactions in the first half of the week, creating an active market atmosphere. However, trading weakened in the second half. Consequently, users of downstream plasticizers and isooctyl acrylate adopted a wait-and-see attitude towards spot octanol, primarily consuming their raw material inventories. High-priced octanol struggled to find buyers. Some holders took profits and actively sold off stocks. Firm quotes at higher levels saw concessions in negotiations, narrowing the price spread. In the East China market, the quoted range narrowed to 7,350–7,400 yuan/ton.
Towards the end of the week, raw material propylene prices dropped sharply. On Friday, Shandong propylene prices stood at 8,525 yuan/ton, down about 500 yuan/ton from the weekly high. This reduced octanol production costs by 350 yuan/ton. As current propylene trading volume remains average, the market center may continue to decline, weakening cost support for octanol. This will also alleviate cost pressure on manufacturers. Next week, octanol production costs are expected to fall below 7,500 yuan/ton, increasing the room for negotiation in the octanol market from a cost perspective.
Given that this round of market uptrend was primarily cost-driven, the expected decline in octanol costs next week, coupled with end-users slowing their purchases of high-priced raw materials, indicates poor transmission of high prices downstream. Downstream users and traders are once again losing confidence in the near-term octanol market outlook. Merchants are actively selling. It is expected that the octanol market center will soften next week. However, considering that some octanol plants in Shandong and Jiangsu have maintenance plans in early August, and octanol costs remain inverted, the downside is expected to be limited.
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