Foreword: This week, the center of gravity of the octanol market shifted upward to a high level, after which trading of high-priced spot cargoes became stagnant. As production costs for manufacturers ease, some octanol units are planning to restart, potentially breaking the current supply-demand balance in the market again.
This week, feedstock propylene prices trended downward due to weak demand. On Friday, the propylene market price in Shandong was 8,795 CNY/mt, a decrease of 155 CNY/mt from the previous Friday. This marked one of the more significant weekly declines recently, lowering octanol feedstock costs by approximately 100 CNY/mt.
The performance of the octanol market varied between the Shandong and East China regions. Due to operating rates dropping to around 50% in Shandong, the spot sales pressure on manufacturers has been significantly alleviated, leading to slow, incremental increases in ex-factory offers. Although downstream buyers resist high-price offers, plant shipments remain tight for some enterprises, allowing producers to maintain firm pricing. In East China, octanol unit operating rates are around 80%, higher than in Shandong. Some enterprises, facing considerable pressure from spot sales, have offered lower prices to attract buyers. Downstream users in East China have shown moderate enthusiasm for purchasing lower-priced cargoes, replenishing stocks selectively when prices are low, which has helped ease inventory levels for octanol producers.
As of Friday, mainstream ex-factory prices in Shandong were near the cost line. Some small-medium enterprises with higher cost bases were still experiencing cost inversion.
As losses in octanol production gradually decrease, producers' motivation to increase operating rates may improve. Additionally, units in Shandong and the Northwest that were under maintenance are expected to restart. From the middle to late June, capacity utilization for octanol is set to increase.
Operating Status of Major Domestic Octanol Units
| Company Name | Operating Capacity (10,000 mt) | Unit Status |
|---|---|---|
| Tianjin Bohua Yongli | 14+14+45 | Running at 70% load; reportedly has plans to increase production rates |
| Shandong Hualu Hengsheng | 25 | Running at 50% load |
| Shandong Jianlan | 21 | Shut down for maintenance on May 22; restart expected next week |
| Shandong Lihuayi | 14 | Running at full load |
| Shandong Luxi Chemical | 49 | Phase II unit shut down for maintenance on May 18; restart date undetermined |
| Shandong Qilu Petrochemical | 8.5+17 | 85,000 mt unit shut down; larger unit operating normally |
| Lanfan Chemical | 14 | Shut down for maintenance on June 7; restart expected next week |
| Dongming Dongfang | 10 | Shut down on May 20; restart date pending |
| Nanjing Chengqing (Jiangsu) | 10+12.5+22 | 100,000 mt unit shut down; other production lines operating normally |
| Jiangsu Huachang | 8+18 | 180,000 mt unit operating normally |
| Anqing Shuguang | 11+22 | Phase I unit shut down on May 6; Phase II operating normally |
| Sichuan Petrochemical | 8 | Running at full load; scheduled maintenance in early July |
| Ningxia Baichuan | 12 | Shut down for maintenance June 4-16 |
| Zhejiang Satellite | 30 | Running at low load |
| Ningbo Juhua | 4.5 | Running at high load |
| Guangxi Huayi | 16 | Scheduled shutdown for mid-to-late June |
Currently, multiple domestic octanol units are shut down or operating at reduced rates, resulting in significant supply losses for the industry. This has led to a period of tightening in spot market supply, providing some price support. Meanwhile, downstream demand remains weak. Key downstream sectors like plasticizers are operating at moderate rates, with insufficient new orders. Downstream buyers are primarily purchasing octanol for immediate needs, showing low willingness to procure spot cargoes. Overall, the octanol market exhibits a state of relative supply-demand balance, with inventory destocking proceeding slowly due to the upcoming supply increase expected in the mid-to-late June.
Supply in the octanol market is expected to increase in the mid-to-late June. Three units that were shut down or running at reduced rates are scheduled to restart, involving substantial capacity, which will significantly lift the industry's operating rate. As losses from octanol production have decreased compared to earlier periods, some currently operating producers are inclined to increase output, further adding to spot supply. Next week, a tangible increase in market supply is anticipated, improving the outlook for spot cargo availability.
On the demand side, there is potential for a recovery in downstream operating rates, suggesting demand could improve. Given that downstream plasticizer manufacturers and other buyers had relatively low raw material inventories earlier, some phase of restocking demand might appear subsequently. However, considering the mediocre performance of end-use demand and downstream buyers' limited tolerance for high-priced raw materials, the magnitude of the recovery in octanol demand is expected to be limited.
Next week, the octanol market will face a situation where supply increases coincide with a potential demand recovery. As the restart of units has a relatively significant impact on market sentiment and available supply, renewed market competition will likely pressure high-priced offers, hindering transactions at elevated levels.
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