DOTP Closed Strongly Before the Holiday; Market Exhibited Volatile Consolidation Post-Holiday

Introduction: Ahead of the holiday, the DOTP market rebounded after a decline. Currently, the mainstream price for DOTP in Zhejiang is 10,250 RMB/ton, up 100 RMB/ton from last Wednesday. The theoretical profit margin for DOTP remains ample; taking Zhejiang as an example, the current theoretical profit for DOTP enterprises stands at 202 RMB/ton.

1. Market Review

Table 1: Domestic DOTP and Related Product Price List

Data Source: Chempricehub Information

Ahead of the National Day holiday, the domestic DOTP market exhibited a rebound following a decline, with market sentiment and transaction focus clearly recovering. As of today, the mainstream quote for DOTP in the Zhejiang region has reached 10,250 RMB/ton, marking a 100 RMB/ton increase compared to last Wednesday. This phase reversal prior to the holiday was primarily driven by external geopolitical news and the rebound in crude oil prices, effectively reversing the previously weak market structure. During the period leading up to the holiday, the market had been continuously weighed down by easing geopolitical tensions and falling crude oil prices. Weakening raw material costs suppressed market sentiment, resulting in thin trading and consecutive price declines, with the market experiencing a downward trend for nearly ten days. Toward the end of the month, geopolitical disruptions perturbed the market, causing international crude oil premiums to rebound. This lifted the broader chemical sector, providing strong sentiment support for the DOTP market. Traders concentrated on covering short positions, while downstream pre-holiday essential stockpiling demand was released intensively, leading to a significant surge in transactions. Low-priced inventory was gradually absorbed, and stakeholders' willingness to hold prices strengthened, successfully ending the downtrend. Prices rose steadily, allowing the September DOTP market to close on an upward note.

Overall, the pre-holiday recovery relied mainly on external news and sentiment-driven stockpiling. Improvements in actual terminal demand were limited, meaning the market rebound was primarily a phased repair rather than a fundamental shift.

2. Data Analysis

Pre-holiday profitability in the DOTP industry remained ample. Based on calculations for sample enterprises in the Zhejiang region, the current theoretical industry profit stands at 202 RMB/ton, a slight decrease of 20 RMB/ton from last Wednesday. However, the overall profit margin remains considerable. This round of profit repair was primarily driven by external market trends. Geopolitical disturbances pushed up international crude oil prices, strengthening the chemical sector. Rising expectations for raw material price increases led to a phased rise in DOTP spot prices, where the rate of increase temporarily exceeded that of raw material costs, thereby repairing theoretical industry profits. However, as prices rose and pre-holiday stockpiling wound down, high-price spot transactions became sparse, with most deals concentrated in lower price ranges. Consequently, momentum for continued profit recovery is insufficient.

Table 2: Domestic DOTP and Related Product Data List

Data Source: Chempricehub Information

Supported by sufficient profits, DOTP enterprises maintained relatively stable operating rates ahead of the holiday, with the current industry capacity utilization rate at approximately 61%. However, some enterprises plan to halt operations for maintenance during the National Day holiday. Industry utilization is expected to drop to 56% during the break, with maintenance cycles generally lasting 4-7 days, representing a relatively short downtime.

Reasonable pre-holiday profitability supported high operating rates, but sluggish demand follow-through constrained the market trend. Short-term maintenance during the National Day holiday will suppress operating levels. After the holiday, as units restart, industry supply is expected to recover quickly. It is projected that the DOTP industry capacity utilization rate will rise to around 65% by mid-October.

3. Post-Holiday Outlook

It is anticipated that upon returning from the National Day holiday, the domestic DOTP market will primarily undergo consolidation at high levels with narrow-range fluctuations. Bullish and bearish factors will intertwine and check each other, limiting the potential for significant price rises or falls.

From the cost perspective, market support is limited. In October, there are expectations for rising operating rates among core raw material producers (Isobutanol), implying a gradual release of additional supply. However, current enterprise inventories are not under heavy pressure, and Isobutanol prices are already close to the cost line, providing strong floor support at low levels. Meanwhile, uncertainty regarding geopolitical situations persists. International crude oil prices are likely to maintain high-level oscillations due to risk-aversion sentiment, offering phased support to the chemical sector and DOTP costs, thereby buffering downside price risks.

On the demand side, October marks the beginning of the traditional peak consumption season for downstream industries. There are expectations for steady recovery in terminal essential demand, which provides basic support for market conditions. However, the current pace of demand recovery is slow and weak. Downstream acceptance of high-priced goods remains low, and procurement sentiment is cautious. Most buyers adhere to strategies of purchasing as needed and replenishing stocks at lower prices, showing little willingness to chase rallies. This significantly constrains the height of DOTP price rebounds and the sustainability of the market trend.

In summary, while the post-holiday DOTP market benefits from phased cost support and the positive outlook for peak-season essential demand, the inability of demand to recover rapidly limits the upside potential amidst bullish-bearish battles. The market is expected to primarily consolidate at high levels in the short term. Going forward, it is crucial to closely monitor geopolitical developments and international crude oil volatility, remaining vigilant against rapid reversals in market sentiment that could trigger price fluctuations.