Introduction
In the first quarter of 2026, the domestic isopropanol (IPA) market exhibited an overall trend of "initial stability followed by a rise, with high-level fluctuations," showing a significant increase over the quarter. As of the time of writing, the mainstream negotiated price in the Jiangsu market has risen to RMB 9,800–9,900 per ton, marking an increase of RMB 4,850 per ton since the beginning of the year—a surge of 96.04%, reaching the highest level in recent years. This round of price increases was primarily triggered by external shocks, gradually transmitting costs downstream through the industrial chain, ultimately driving a recovery in IPA industry profits. This represents a deep adjustment transmitted from the cost end to the price end.

I. The Market in Q1 Showed a Trend of Initial Stability Followed by a Rise, with High-Level Fluctuations

Phase 1: Low-Level Consolidation (January to Mid-February)
After the New Year, the IPA market steadily recovered from low levels, mainly supported by rising raw material acetone prices and shifts in market sentiment. However, due to weakening demand, downstream end-user factories became more cautious in procurement, and market acceptance of high prices was limited, resulting in relatively minor overall price fluctuations. In early February, coinciding with the Spring Festival holiday, downstream end-user factories gradually suspended operations and exited the market. Trading activity was quiet, with transactions largely stagnant, and the market remained in a deadlock. During the holiday, as some IPA plants maintained low-load production, inventories did not accumulate significantly, limiting supply-side pressure post-holiday. Traders mostly consumed existing inventories, but market transactions were insufficient, leading to subdued trading activity and a phase of consolidation.

Phase 2: Fluctuating Uptrend (Late February to Early March)
In late February, due to the ongoing escalation of geopolitical conflicts in the Middle East, international crude oil prices experienced sharp fluctuations. As a core raw material for the oil-based chemical industry, changes in crude oil prices quickly transmitted to downstream chemical raw materials, triggering a chain reaction of price increases. The surge in crude oil led to a sharp rise in the prices of raw materials acetone and propylene, and the IPA market followed suit actively, with negotiated prices in the Jiangsu market reaching the RMB 9,000 per ton threshold.

Phase 3: High-Level Retreat (Mid-March)
As tensions in the Middle East eased, crude oil prices corrected, and the prices of raw materials acetone and propylene fell rapidly. The cost support for IPA collapsed, leading to a sharp price drop, with negotiated prices in the Jiangsu market falling to around RMB 7,500 per ton, intensifying market participants' wait-and-see sentiment.

Phase 4: Renewed Uptrend (Late March to Month-End)
A rebound in international crude oil prices drove acetone prices to rise again. IPA intermediaries became less willing to sell at low prices, and offers were tentatively raised. Additionally, increased inquiry activity in the export market quickly alleviated manufacturers' sales pressure, with some halting sales and offers. The market entered a new round of upward movement. As of the time of writing, negotiated prices in the Jiangsu market have risen to RMB 9,800–9,900 per ton, reaching the highest level in recent years. Downstream end-user factories remained cautious in procurement, trading activity was quiet, and transactions were mostly small orders for immediate needs.

II. The IPA Market Shifted from Cost Pressure to Profit Recovery

In January–February 2026, raw material prices such as acetone and propylene remained relatively stable, while IPA market demand continued to be weak, with sluggish transactions and prices hovering at low levels. Consequently, the theoretical profit margins for both major production processes were in negative territory, placing significant cost pressure on producers. Entering March, with changes in raw material costs and product prices, the theoretical profit margins for both processes improved significantly, rebounding to annual highs. The industry's overall profits turned from negative to positive and continued to rise. As of the time of writing, the theoretical profit margin for the acetone-based process is approximately RMB 400 per ton, while that for the propylene-based process has reached around RMB 1,714 per ton, marking annual highs.

III. IPA Production in Q1 Increased by 6.57% Year-on-Year

In the first quarter of 2026, cumulative domestic IPA production reached 187,100 tons, a year-on-year increase of 6.57%. By production process, acetone-based output was 136,300 tons, with an average operating rate of about 66%; propylene-based output was 50,800 tons, with an average operating rate of about 62%. In terms of operations, the industry ran steadily in January with minor production fluctuations. In February, affected by the Spring Festival holiday, some plants in Shandong, as well as companies like Ningbo Juhua and Huizhou Yuxin, suspended operations or reduced loads, leading to a noticeable decline in industry operating rates and a corresponding drop in production. After the holiday, plants gradually resumed or increased production, and by March, supply had largely recovered to early-year levels, with relatively ample market supply.

Market Dynamics in Q2 to Shift from Cost-Driven to Supply-Demand Led

Looking ahead to the second quarter, the domestic IPA market is expected to gradually transition from being cost-driven to being led by supply and demand dynamics. As prices continue to rise, downstream procurement has slowed. Coupled with expectations of new capacity releases, resistance to further price increases will grow, making the supply-demand balance more prominent in influencing prices. Moving forward, close attention should be paid to international developments, raw material price trends, downstream operating rates and procurement patterns, as well as the actual commissioning progress of new facilities, as these will serve as key indicators for judging market direction.