Lead: From mid-July, under elevated cost pressure, multiple 2-ethylhexanol (2-EH) units cut output, sharply reducing spot market supply. Combined with the sharp rise in international crude oil prices that boosted buyer confidence, 2-EH market prices climbed continuously. After rising to high levels, pressure on high-priced transactions in the 2-EH market began to emerge.
I. July 2-EH market center moved up continuously
The domestic 2-EH market center climbed continuously in July. As of July 31, the Shandong market closed at 7,800 yuan/ton, up 650 yuan/ton from the end of June. In early-to-mid July, under high cost pressure, 2-EH units in East China and Shandong reduced operating loads to mitigate cost losses, keeping the industry overall operating rate at a medium-to-low level. During the month, international crude oil prices fluctuated widely; when oil prices surged, buying activity for 2-EH was effectively boosted, and the market center gradually moved higher. Toward month-end, end-users and downstream buyers slowed procurement of high-priced raw materials, and market transactions cooled.
II. Social inventory declined to a low level
In January-February, 2-EH industry inventories accumulated significantly, particularly in February, leaving industry inventory at a high level in March. However, driven by strong international crude oil, the 2-EH market center surged to its year-to-date high in March. From April onward, under the dominant pressure of new capacity commissioning and destocking, 2-EH producers proactively offered discounts to move goods, and prices began a downward trend. From May to July, although some units underwent maintenance and regional supply tightened somewhat, downstream plasticizer operating rates improved only limitedly, with 2-EH procurement remaining largely need-based, keeping the market center under sustained pressure.
After the destocking cycle, domestic 2-EH industry inventories gradually declined. By end of July, industry 2-EH inventory was estimated at around 50,000 tons, a relatively low level, while monthly average prices also gradually slipped. Against this low-inventory backdrop, the market's downward pace was constrained. At end of July, 2-EH market prices stood at a cyclical high; downstream resistance was evident, but due to the low overall industry inventory, the decline from high prices was slow. In the last week of July, Shandong market prices fell by only 100 yuan/ton.
III. Significant regional supply-demand divergence in August
As 2-EH industry margins improved slightly by end of July, operating enthusiasm at Shandong 2-EH units increased somewhat. In early-to-mid August, 2-EH supply in Shandong will be ample, with surplus volumes sold to other regions. Loose supply in the Shandong market will exert downward pressure on prices in Shandong and surrounding areas.
However, three units in East China have rotating maintenance schedules from August to October. East China 2-EH units will operate at medium-to-low loads overall, with producers reducing contract supply volumes for August-October, sustaining a local supply-shortfall pattern and increasing external purchases. This will effectively limit the downside room for 2-EH market prices. As a major consumption area, increased external procurement in East China will partially offset the price impact from Shandong's declines.
IV. Market forecast
The market is expected to remain under pressure and trend weak in the short term. Although some manufacturers in East China are operating at low loads, keeping regional spot supply tight, and producers are inclined to support prices, providing some support to market sentiment, the main pressure currently comes from the Shandong market, where supply is recovering upward and near-term spot selling pressure is increasing. Meanwhile, downstream DOP product spot costs are inverted, overall plasticizer market transactions are lackluster, downstream users maintain need-based procurement of 2-EH feedstock, and spot procurement slowed in early August. As such, demand can hardly provide effective support for 2-EH prices. Therefore, under the dual pressure of rising Shandong supply and weak downstream demand, the near-term 2-EH market has room for a correction from highs.
Entering mid-to-late August, as scheduled maintenance at Shandong units materializes, regional supply pressure will gradually ease and market supply-demand relations will improve. The continuation of low-load operations in East China, combined with Shandong maintenance, will bring supply-side support to the fore once again, providing solid support for 2-EH market floor prices. In summary, the August 2-EH market is expected to show a decline-then-rebound trajectory, with relatively limited downside. Going forward, close attention should be paid to Shandong unit maintenance and the restart status of other units.
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