[Lead] Before the May Day holiday, the domestic octanol market faced downward pressure as supply loosened and downstream customers showed lackluster pre-holiday restocking. During the holiday, propylene feedstock prices rose, driving up costs, while low-end octanol prices stabilized.

1. Market Review (April 27 - April 30)

Before the May Day holiday, the domestic octanol market faced downward pressure. On the last working day before the holiday, the mainstream ex-factory price in Shandong fell to 8,700 yuan/ton. Prior to the holiday, previously idled octanol units resumed normal production in a concentrated manner, significantly boosting capacity utilization and substantially increasing supply. Meanwhile, downstream plasticizer product transactions only saw periodic deals at the end of the month, leaving buyers with tepid interest in spot octanol procurement, resulting in poor pre-holiday restocking sentiment. Additionally, as cost pressures for plasticizer products became evident this week, the DOTP product faced cost inversion due to rising prices of its other feedstock, PTA. This made downstream users resistant to high octanol price offers, further weighing on the octanol market. Major octanol plants destocked inventory before the May Day holiday, gradually lowering the market center to attract buyers. Propylene feedstock prices rose strongly at the end of the month, providing cost support for low-end octanol price offers. Although low-end prices were loss-making, buying interest increased, though mostly concentrated at the lower end of offers. During the holiday, high-end offers in Shandong saw a delayed correction.

2. Data Analysis

Looking at profitability of octanol and its main downstream plasticizer products, profits across all products declined. Notably, DOTP margins turned negative this week, as the other feedstock, PTA, maintained firm prices while DOTP prices weakened, putting significant cost pressure on DOTP, resulting in an average weekly margin of -99 yuan/ton. DOP margins improved compared to last week, as the other feedstock, phthalic anhydride, fell this week, leaving DOP profitability better than DOTP, at 128 yuan/ton.

For octanol, as plants offered discounts to destock, the industry's average weekly profit dropped to 171 yuan/ton, with some producers already facing cost inversion. During the holiday, propylene prices in the Shandong region continued to rise. It is reported that Shandong propylene offers were at 9,700-9,800 yuan/ton, up about 120 yuan/ton from before the holiday. This increased octanol feedstock costs by roughly 85 yuan/ton, pushing the theoretical cost for Shandong octanol to 8,950-9,000 yuan/ton. During the holiday, Shandong octanol ex-factory prices remained at 8,700 yuan/ton. Based on spot prices, Shandong octanol plants are facing losses of 250-300 yuan/ton.

Before the May Day holiday, operating rates at major downstream plasticizer plants saw little change, mostly running at medium loads. Some units under maintenance or production cuts are expected to ramp up in May. The operating rate for 2-ethylhexyl acrylate units increased significantly.

DOP operating rate was 58%, down 3 percentage points. Nanjing Libang unit restarted, Languan's large unit restarted after a brief shutdown, Zhenjiang Liancheng reduced output, and Weibo unit had a brief shutdown. DOTP operating rate was 63%, down 3 percentage points, with Shandong Languan and Foshan Guansheng reducing output. 2-Ethylhexyl acrylate operating rate was 74%, up 11 percentage points, as the BASF Zhanjiang unit restarted during the period.

3. Post-Holiday Outlook

Considering octanol costs, propylene prices remained strong during the holiday, but high-priced propylene transactions were average, with downstream products showing resistance and market transactions stalemated. A slight downward correction from the high levels is possible after the holiday. However, octanol product cost pressure remains considerable, providing strong support from the cost side.

On the supply side, as cost pressures for octanol become increasingly evident, some units have planned maintenance opportunities. Anqing Shuguang plans to shut down one octanol unit after the holiday, and it is reported that a unit in Tianjin is scheduled for maintenance for about a week after the holiday. This will alleviate supply pressure in the octanol market. Domestic octanol capacity utilization is expected to drop to around 93%. However, with the new units in Tianjin and South China running steadily, the shutdown of these two units will not cause tight supply. The market supply will remain relatively ample, though spot sales pressure for some producers will be somewhat alleviated compared to expectations.

The overall operating rates of major downstream plasticizer units are relatively stable. Brief maintenance at some downstream units has a limited impact on the immediate demand for octanol. Plasticizer products face significant cost pressure, so buyers remain cautious in their price intentions for spot octanol procurement. International crude oil and propylene feedstock prices remain firm, supporting the floor price for the octanol market from both sentiment and cost perspectives. The octanol market center is expected to consolidate within a narrow range after the holiday.