Introduction: The DOTP market in the first half of 2026 experienced a surge followed by a decline. In March, rising geopolitical tensions in the Middle East pushed up crude oil costs, driving DOTP to a near two-year high and reversing the downtrend seen at the start of the year. However, the industry's oversupply situation remained unchanged. After tensions eased, cost support weakened, leading to a continuous price decline in the second quarter. The average market price for the first half was 8,988 yuan/ton, up 21% from the second half of 2025 and up 10% year-on-year compared to the first half of 2025.
I. DOTP Market: Surge Followed by Decline
In the first half of 2026, DOTP prices showed a trend of rising and then falling. Taking the Zhejiang market as an example, the average DOTP market price was 8,988 yuan/ton, an increase of 1,561 yuan/ton or 21% compared to the second half of 2025. This represents a 10% year-on-year increase compared to the first half of 2025. The highest point of the first half occurred on March 24, with an ex-factory reference price of 10,700 yuan/ton. The lowest point was at the end of February, with an ex-factory reference price of 7,750 yuan/ton. Due to geopolitical influences, both the high and low points appeared in the first quarter. The fundamental oversupply situation in the market did not see substantial improvement, leading to a predominantly fluctuating downtrend in the second quarter.
Overall, the DOTP market in the first half of 2026 showed a pattern of rising and then falling. The market narrative was a two-way game between positive geopolitical cost factors and persistently weak demand. The first quarter experienced wide fluctuations, while the second quarter saw continuous weakening. Supply and demand, raw materials, and geopolitics alternately dominated the price rhythm. The most significant characteristic of the first half was that market sentiment drove prices, while fundamentals failed to provide lasting support. The lack of demand elasticity in the industry constantly suppressed the upside potential for prices.
Geopolitical conflicts and crude oil fluctuations were the core drivers of the staged price increases. The escalation of the Middle East situation in the first quarter drove simultaneous strength in crude oil, octanol, and PTA. Cost support pushed DOTP to a near two-year high. However, geopolitical benefits are short-lived. After the situation eased in the second quarter, support from crude oil and raw materials quickly faded, and prices lacked the momentum for sustained increases. Adding to this, pre-May Day inventory clearance by merchants offering discounts formally established a downward channel for the DOTP market. From May to June, the seasonal lull combined with weakening crude oil plunged the industry into a unilateral decline. Although production cuts in octanol occasionally provided a floor, terminal orders were insufficient and underlying demand was weak, causing brief rebounds to fail, and the rate of decline accelerated in the second half of June.
Overall, the cost tailwinds in the first half were merely temporary. Geopolitical sentiment and raw material volatility created short-term fluctuations, but substantive terminal support was absent. This led to an inability to maintain high prices after the surge, and the market center of gravity continuously shifted downward. The fundamental situation of weak terminal underlying demand and persistent supply pressure dominated the long-term trend.
II. Supply Growth in the First Half
From January to June 2026, domestic cumulative DOTP production reached 1,014,600 tons, a year-on-year increase of 7.70% compared to the first half of 2025, but a decrease of 3.46% compared to the second half of 2025. The industry's average capacity utilization rate in the first half was 60.30%, an increase of 2.79 percentage points year-on-year, but a decrease of 1.93 percentage points compared to the second half of last year. The sequential decline in production is seasonally reasonable, primarily due to the Chinese New Year holiday in the first half, which significantly disrupted the industry's production rhythm. During the Spring Festival period, most production units undergo routine shutdowns for maintenance and holidays. This temporary shutdown directly lowered the total production for the first half, a fluctuation pattern consistent with the production volume changes observed during Spring Festival periods in previous years.
Overall, industry operating rates remained in the medium-to-high range during the first half, supporting the year-on-year increase in production. In January, favorable terminal product orders and tight spot supplies led to high-load production to ensure supply. Post-holiday, industry profitability was still acceptable, manufacturers resumed operations relatively quickly, effectively filling the production gap from the holidays. Sustained profitability from April to May also continued to boost production willingness, resulting in ample market supply. It wasn't until June that the downstream sector entered the traditional off-season, terminal underlying demand shrank significantly, and industry profitability turned negative. This cooled manufacturers' production enthusiasm, leading to a significant reduction in plant operating rates.
In summary, excluding the short-term disruption of the Spring Festival holiday, enterprises had sufficient production willingness and stable operations during most of the first half. Adequate supply matched staged market demand, driving a year-on-year increase in total output. However, by the end of the quarter, weak off-season demand and production losses jointly suppressed industry operating levels, causing them to weaken.
III. Capacity Expansion Expectations in the Second Half
Based on currently known capacity expansion plans, the DOTP market capacity is still set to expand in the second half of 2026. It is estimated that about 370,000 tons of new capacity is planned for commissioning in the DOTP industry during the second half of 2026. The new capacity is mainly distributed in Jiangsu and Guangdong provinces. Among them, Guangdong Lingchuang's 250,000-ton unit is expected to start production in August, and Taizhou UPC's 120,000-ton unit is expected to start production in the third quarter. Given the current oversupply of DOTP capacity, there may be continued capacity elimination alongside the addition of new capacity. Additionally, since many plasticizer units in the industry have flexible switching capabilities, when DOTP profit margins are sufficient, some capacity from other plasticizers may be temporarily switched to produce DOTP. This flexible production adjustment mechanism, while potentially optimizing resource allocation to a certain extent, may also exacerbate supply volatility and bring uncertainty to the medium-to-long-term supply-demand balance.
IV. Expectation of Fluctuating and Weak DOTP Market in the Second Half
Looking ahead to the second half of 2026, the overall domestic DOTP market trend is expected to show a fluctuating and weak pattern. The July-August period will see the industry deeply entrenched in the traditional off-season. High temperatures combined with weak terminal consumption will keep operating rates of downstream plastic product manufacturers at low levels. New order intake will be insufficient, and spot market procurement for underlying needs will tend to be cautious. The demand side will provide weak support, continuously suppressing DOTP spot prices. It won't be until the traditional peak season of "Golden September and Silver October" that the impact of the off-season gradually fades. There is potential for recovery in downstream operating rates and restocking demand. A pick-up in terminal orders could drive a modest rebound in DOTP, but the industry's long-term oversupply pattern is difficult to reverse, significantly capping the upside for price increases.
On the cost side, staged negative factors still exist. As geopolitical tensions in the Middle East gradually cool down, crude oil supply and regional shipping order are restored, the international oil price center of gravity is trending downwards, pulling down the entire chemical chain. Key upstream raw materials like octanol and PTA are under pressure simultaneously. Cost support continues to weaken, further exacerbating the weakness in the DOTP market, and it is difficult to see substantial positive catalysts in the short term. Coupled with the overcapacity pressure within the octanol industry itself, raw material prices may fluctuate at low levels for an extended period, making it difficult to form a lasting cost floor.
Overall, the DOTP market in the third quarter is expected to be predominantly weak and fluctuating. The peak season in the fourth quarter may provide some staged support, but constrained by the fundamental oversupply, a calmer geopolitical environment, and continuously weakening raw material costs, the momentum for price recovery is insufficient. Combining the dual logic of supply and demand and costs, DOTP prices in the second half of the year are expected to maintain a fluctuating and weak operational trend.
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