Weakening cost support combined with a bearish market sentiment has led to a decline in DOTP prices.

Recently, the DOTP market has ended its previous strong trend, with prices retreating from high levels. Taking the Zhejiang market as an example, the current mainstream spot reference price for DOTP is 10,500 yuan/ton, a decrease of 200 yuan/ton from Monday's price, representing a decline of 1.87%. Weakening cost support, bearish market sentiment, insufficient downstream buying, and ample market profits have collectively driven the market lower.

I. Decline in Raw Material Octanol Prices

Recently, the price of octanol, the core raw material for DOTP, surged then pulled back, significantly disrupting DOTP costs and providing direct bearish guidance to market prices. In the first half of the week, buoyed by rising international crude oil prices, upstream propylene prices steadily increased, lifting the overall cost center of the industrial chain and providing sufficient upward momentum for the octanol market. Domestic octanol prices quickly surged to high levels. However, after reaching these highs, upward momentum faded rapidly. Downstream end-users showed low willingness to accept high raw material prices, with resistance intensifying and market transactions cooling off. In the second half of the week, the octanol market followed this weakness, with price declines expanding. As of now, the octanol market price in Shandong is reported at 9,200 yuan/ton, down 300 yuan/ton from the early-week high of 9,500 yuan/ton, a drop of 3.16%. As octanol is a key raw material for DOTP production, this significant price pullback directly lowers industry production costs.

II. PTA Raw Material Surges Then Pulls Back

This week, the PTA market also exhibited a surge-and-pullback pattern. In the first half of the week, tensions between the US and Iran drove international crude oil prices higher, providing firm cost-side support for PTA. Additionally, downstream buying interest emerged, and shipments from major producers were hindered, leading to tight liquidity in the spot market. These factors combined to push PTA prices strongly upward. On September 16, East China spot prices briefly surged to 7,395 yuan/ton, hitting a new price high not seen since June 2022 (over four years).

In the second half of the week, signals emerged from the US side indicating that the US-Iran conflict was winding down. Various reports pointed to easing geopolitical tensions in the Middle East, causing international crude oil prices to fall and rapidly weakening PTA's cost-side support. Bearish sentiment spread through the downstream market, noticeably cooling purchasing intent. Meanwhile, several PTA units restarted during the week, increasing market supply. Expectations of inventory buildup on the balance sheet expanded, weakening the supply-demand structure and driving PTA prices down from their highs. Currently, the East China PTA spot reference price is 6,995 yuan/ton, down 400 yuan/ton from the weekly high, a drop of 5.41%. The significant correction in PTA prices creates a cost-side drag on the DOTP market. Combined with the simultaneous weakening of octanol cost support, these dual cost pressures continue to weigh on the DOTP market, exacerbating bearish sentiment and creating room for further declines in DOTP spot prices.

III. Ample Profit Support Leaves Room for DOTP Price Concessions

Affected by broadly declining raw material costs, theoretical profits for current DOTP producers have risen to high levels. Taking the Zhejiang market as an example, DOTP theoretical profit reached 426 yuan/ton, with a weekly average profit of 354 yuan/ton, indicating ample profitability margins. Improved profits have boosted production enthusiasm among enterprises. Some previously shut-down units have recently restarted, suggesting an upward trend in industry operating rates. It is estimated that next week's DOTP capacity utilization may rise to around 62%, putting incremental pressure on market supply.

Demand, however, has not improved simultaneously; downstream buying sentiment remains weak. Previous queues for shipment of enterprise inventories are gradually resolving, and social inventories are beginning to accumulate. Under the dual pressure of ample profits and sluggish new order transactions, DOTP spot prices face downward pressure. At this stage, enterprises still have significant room to offer concessions to facilitate sales. Inventory holders show a strong willingness to sell, actively lowering quotes to drive actual transactions, leading to a continuous increase in low-price货源 (sources/inventory) in the market. The contrast between expected supply increases and weak demand, coupled with substantial profits giving enterprises flexibility in pricing adjustments, dominates the market's pressured performance.

IV. Market Outlook

From the cost perspective, the raw material market for DOTP is generally weak, imposing obvious bearish pressure on the industry. Trading in the core raw material octanol is generally quiet, with prices under sustained pressure, and the short-term weak market structure is unlikely to change soon. For the other raw material, PTA, expectations of supply increments remain, with industry inventory accumulation continuing to expand. Coupled with falling international oil prices dampening overall market sentiment, the high-price structure of PTA is loosening, and prices are under downward pressure. Due to these multiple factors, cost-side support for DOTP continues to weaken, market sentiment turns bearish, bringing downward pressure to spot prices.

Supply and demand dynamics are generally weak, with bearish factors concentrating. On the supply side, there is an expectation for increased operating loads in the DOTP industry, leading to more market availability and gradual inventory accumulation by enterprises. With the National Day holiday approaching, traders are primarily focused on actively releasing inventory before the holiday to recover capital. On the demand side, follow-through is weak. Downstream enterprises are only making small, opportunistic restocks when prices dip, showing low acceptance of current high prices. Overall new order transactions remain sluggish, further dragging down market conditions.

In summary, both the cost and supply-demand sides currently present clear bearish guidance for the DOTP market, keeping prices under general pressure. However, uncertainties remain regarding geopolitical situations, and traders' bearish sentiment is relatively cautious. Attention must be paid to potential market volatility caused by rapid reversals in crude oil sentiment. In the short term, DOTP market prices are expected to trend lower overall. Key focus should remain on tracking raw material price trends, changes in industry operating rates, and actual downstream procurement follow-through.