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Lead-in: Around the National Day holiday, the DOTP market continued to fluctuate upward, driven by cost tailwinds. Mainstream ex-factory quotes in Zhejiang rose to 11,300 RMB/ton, reaching a new high since Q2 2024. Throughout this rally, costs have been the primary driver of price increases. However, as prices surged, trading activity at these elevated levels slowed, putting pressure on the market's high-end pricing.

I. Octanol Prices Rise Then Stalemate

Since October, the octanol market has primarily trended upward with fluctuations. In late October specifically, the restart of upstream propylene maintenance units lagged behind expectations, continuing a tight supply pattern. Combined with crude oil remaining at high levels, which strongly pushed up propylene prices, the contradiction of negative margins for octanol intensified, leading to quote adjustments upwards. On the supply side, octanol operating rates in October remained at low annual levels, with an average monthly capacity utilization rate of 72%, a further decline of 1 percentage point from September. Spot supply in the East China market was slightly tight. Downstream users conducted phased restocking when prices dipped, releasing demand that aligned with the bullish market sentiment, resulting in phased volume gains. Supported by multiple factors including costs, supply, and demand, the center of gravity for the octanol market continued to rise, breaking through this year's highs. As of November 2, the reference price for Shandong octanol was 10,250 RMB/ton, up 1,300 RMB/ton or 15% from the end of September. As a core raw material for DOTP, strong octanol performance provided solid support to DOTP from the cost side.

However, overnight international crude oil closed significantly lower, rapidly disrupting sentiment in the chemicals market. Affected by changes in cost expectations due to falling oil prices, buying enthusiasm in both octanol and DOTP markets cooled noticeably. Downstream product enterprises became more cautious in procurement, and wait-and-see attitudes increased. The cost logic that previously supported the market strength faced disruption, shifting market psychology from bullish to cautious. Bull-bear battles intensified at high levels for octanol and DOTP. Short-term trends are now more likely to follow crude oil volatility, with market participants waiting for further guidance from oil prices and the raw material sector.

II. PTA Prices Surge Then Pull Back

After the National Day holiday, domestic PTA market prices also trended upward with fluctuations. Geopolitical disturbances and macro interest rate hike expectations intertwined during the month, while international crude oil oscillated at high levels. Strong support from the cost side clashed with weak fundamentals in the industrial chain, leading to a pullback after prices surged. PTA valuations switched repeatedly between high-level corrections and low-level recoveries. Supported by high oil prices, the price floor was resilient, and its strength once provided cost-side support to DOTP.

However, today's sharp drop in crude oil dragged down the overall atmosphere for commodities. With weak supply-demand dynamics and insufficient demand support for PTA, the center of gravity for intraday spot negotiations shifted downward noticeably. The PTA market weakened, cost-side benefits faded, turning into bearish pressure on the DOTP market.

III. Tight Local Supply and Ample DOTP Profits

Affected by the National Day holiday and phased shortages in raw material supply, the average monthly capacity utilization rate for the DOTP industry in October was 58%, placing it at medium-low levels for the year. According to Chempricehub statistics, maintenance losses for DOTP units in October amounted to 45,400 tons, an increase of 14,700 tons or 48% compared to September; and an increase of 32,400 tons or 249% compared to October last year. Notably, many enterprises in the Zhejiang region halted production, leading to prominent tightness in spot supply. In the second half of the month, several factories experienced backlogs and queues for shipment.

Tight local spot supply combined with high raw material costs bolstering the bottom led traders and producers to maintain strong hold-high-price sentiments. DOTP industry profits recovered significantly, with ample profitability space. Calculated based on the Zhejiang market, the average theoretical profit for DOTP in October was 271 RMB/ton, a year-on-year increase of 317%. Today, the theoretical profit in the Zhejiang region has reached 524 RMB/ton.

In the latter half of this week, several shut-down units, including Ningbo Nanya, Anhui Litian, and Ningbo Xiangda, have plans to restart. Coupled with downstream buyers becoming increasingly cautious about chasing high-priced goods, the market formed expectations of increasing supply and weakening demand. The tight spot situation is expected to gradually ease. At present, industry profits are relatively ample, giving producers some room for concessions.

IV. Market Outlook

On the cost side, DOTP's core raw material, octanol, has turned profitable. Earlier high propylene prices have retreated, weakening the cost support for octanol. Additionally, with overall supply tending towards looseness and rising resistance from downstream users to high-priced goods, the octanol market has entered a stalemate. Another raw material, PTA, faces weak demand support and pessimistic industrial outlooks. Meanwhile, geopolitical situations remain volatile without clear directional guidance, suggesting the PTA spot market will likely trade weakly within a range. Overall, cost support for DOTP is shifting from strong to weak.

On the demand side, although downstream demand is slowly recovering, customers are cautious about following high-priced goods, lacking willingness for large-scale restocking. This makes sustained transactions difficult, pressuring DOTP prices. However, rigid demand still provides support, forming a floor for the market at lower levels.

Comprehensive judgment suggests that as DOTP cost support weakens and the previous tight spot situation is expected to ease next week, downstream buyers' caution against chasing highs will keep DOTP prices under pressure at elevated levels. Future focus should be on tracking geopolitical developments and being wary of rapid reversals in crude oil sentiment causing market volatility.