Introduction: Changes in the geopolitical landscape have triggered a rebound in crude oil prices, driving buying sentiment in the market. With sustained positive trading activity, DOP market prices have bottomed out temporarily and rebounded rapidly. The market has shifted from losses to profits, and as inventory levels decline, DOP operating rates are beginning to recover.
Earlier, weak demand in the DOP market led to consecutive price declines, with delivered prices in Jiangsu dropping to as low as 7,800 yuan/ton. Due to the oversold condition, DOP operations were running at a loss, with sample market losses reaching a maximum of 356 yuan/ton. This weakened buying interest for raw materials, dragging down octanol market prices. However, when octanol prices hit 6,500 yuan/ton, trading volume improved, halting the downtrend. Consequently, at the beginning of the week, DOP traders actively covered short positions, and end-users made moderate purchases based on immediate needs.
Later, geopolitical factors caused crude oil prices to rise, further boosting end-user buying sentiment and prompting active stock-up. DOP market transactions showed sustained strength, with demand supporting consecutive price increases. The price rebound outpaced that of raw materials, turning market profits from losses to gains. Sample market profits once recovered to 361 yuan/ton. As of July 10, DOP delivered prices in Jiangsu rose to 8,450 yuan/ton, an increase of 650 yuan/ton or 8.33% from the recent low.
Looking at profitability trends, the market operated at a loss in late June, leading to an increase in DOP plant shutdowns and production cuts. Units including those at Lanfan, Jiuhong, Yimeide, Weibo, and Xuecheng Energy experienced varying degrees of fluctuation. Production hit its lowest point in early July, with daily capacity utilization dropping to 44%, even below the 46% level seen during the Chinese New Year holiday. However, supported by the crude oil rally and sustained improvement in buying, spot inventory levels declined. Idle and reduced-capacity units gradually resumed operation. As of July 10, DOP daily capacity utilization had recovered to 54%, with expectations of further increases.
Supply forecast: With improved trading activity this week, spot inventory levels for DOP have declined. However, as more idle units restart, production is gradually recovering. Daily output is expected to rise to around 4,000 tons, and daily capacity utilization is projected to gradually return to approximately 60%, gradually restoring spot supply.
Demand forecast: End-user consumption remains in a seasonal low period. Due to prolonged bearish expectations, many buyers had maintained low inventory levels. This week, DOP market transactions saw consistent strength with significant trading volume. As suppliers gradually deliver goods, end-users are expected to have sufficient supply for the next 7 to 10 days, leading the market into a brief period of digestion, with new order buying sentiment gradually cooling.
Price forecast: As cargoes are gradually transferred downstream for digestion, short-term DOP price movements will still require support from the raw material market. Reduced supply of octanol can support a slight upward price trend. The phthalic anhydride market also benefits from concentrated buying support, providing a basis for price firming. Thus, while end-users digest existing stocks, the DOP market will primarily be supported by costs, and prices are expected to remain high in the short term. However, as high-priced buying weakens, price fluctuations will again be driven by supply and demand fundamentals. In the event of profit-taking from low-priced sales and renewed accumulation of spot inventory, DOP prices are still expected to face downward pressure.
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