Lead: Under cost pressure, the raw material octanol market has reduced production, supporting a gradual price increase. This has driven DOP prices slightly higher as well, leading to a modest improvement in market profitability. However, demand follow-up remains limited, providing weak support for further price gains.

Octanol prices edge up; DOP market focuses on destocking

In late May, losses in China's octanol industry continued to deepen, prompting intensive maintenance at production facilities and lowering industry operating rates. At present, declining feedstock inventories combined with rising export orders have jointly underpinned the market, pushing octanol prices off the bottom. This cycle's low point reached 7,800 yuan/ton. As of June 9, the mainstream quoted price for octanol in Shandong rose to 8,100 yuan/ton, with low-end prices accumulating a total increase of 3.85%.

Driven by the upward trend in feedstock octanol, cost pressure on the DOP side has escalated, and coupled with tight spot supply in some regions, DOP market prices also stopped falling and recovered. Among them, naphthalene-process DOP supplies remained at low prices, with a bottom range of 8,700 yuan/ton. As of June 9, the mainstream DOP quoted price in Shandong reached 9,000 yuan/ton, an increase of 3.45%. However, end-user demand for plasticizers remains weak. Market transactions are dominated by periodic replenishment, lacking sustained buying. The support for price increases is insufficient, and overall transaction volumes remain limited.

Cost divergence between ortho-xylene and naphthalene processes; DOP operated at a loss

Since April, tightening supply of ortho-xylene feedstock has limited the downward room for ortho-xylene-based phthalic anhydride prices. Entering late May, continuously rising costs of phthalic anhydride feedstocks put significant pressure on ortho-xylene-route DOP production. Industry profitability weakened and turned into losses, reaching a loss of 107 yuan/ton. As DOP market prices recovered, profitability under this process gradually improved to a ton-profit level of 60-70 yuan/ton.

The profit divergence between production routes has become pronounced. Naphthalene-based phthalic anhydride DOP has maintained profitability. Even during the phthalic anhydride price increase cycle in late May, although profits were compressed, they still stood at 200 yuan/ton. Under normal operating conditions, profits generally exceeded 300 yuan/ton.

Fluctuations in profitability levels have driven enterprises to dynamically adjust production pace. The average operating rate of China's DOP industry dropped continuously from 59% to 49% by the end of May. Currently, the operating rate has recovered somewhat to 53%. Coupled with the orderly digestion of spot resources, inventory levels in some storage areas have declined slightly.

No improvement in demand; DOP still faces offtake pressure

On the feedstock side, the loss margin for octanol has narrowed slightly. However, with some maintenance units scheduled to resume production next week, supply is expected to increase, creating downward pressure on prices. The phthalic anhydride market is likely to maintain a narrow range fluctuation in the near term. Tight supply of naphthalene-based phthalic anhydride provides strong price support. For ortho-xylene-based phthalic anhydride, multiple units are undergoing maintenance this month, tightening overall supply and providing fundamental support for prices. Taken together, DOP production costs have some room for a minor decline.

On the supply-demand side, current downstream end-user demand remains stable, but as the industry gradually enters the traditional consumption off-season, market demand is likely to weaken further. Insufficient support from the demand side makes it difficult to drive significant production increases. It is expected that the average DOP industry operating rate will remain around 55%. The overall offtake pressure in the market persists, and the market is expected to weaken, with prices likely to edge down narrowly.