Strong upward momentum in raw material prices has led to a gradual rise in the market center for 2-ethylhexanol.

Introduction: Following the National Day holiday, propylene feedstock prices for 2-ethylhexanol (OCT) surged significantly. As of October 10, the ex-factory price of propylene in Shandong rose to 10,550 yuan/ton, an increase of 810 yuan/ton compared to September 30. However, the mainstream ex-factory price of OCT in Shandong stood at 9,100 yuan/ton, only up by 150 yuan/ton from September 30.

I. Post-Holiday OCT Price Increases Failed to Keep Pace with Rising Costs

(Note: Image and caption content ignored per instructions)

During the National Day holiday, some OCT ex-factory prices dropped under pressure from spot sales, falling to 8,700 yuan/ton. As the center of gravity for propylene prices shifted upward, transactions at lower market levels gradually improved, leading to a transfer of industry inventory downstream. Upon returning to the market after the holiday, propylene prices continued to rise sharply due to tightened supply expectations. Conversely, the fundamental supply-demand balance in the OCT market remained weak. Inventory accumulation at OCT plants during the holiday caused market price increases to lag behind cost hikes. By October 10, the mainstream quoted ex-factory price in Shandong rebounded to 9,100 yuan/ton, up 150 yuan/ton from late September, reflecting a scenario of strong costs but moderate demand performance.

II. Severe Cost Inversion Leads to Lower-than-Expected OCT Operating Rates

Table 1: Comparison of Domestic OCT Gross Margin and Major Downstream Operating Rates (Unit: Yuan/Ton)

As of October 10, calculated based on spot propylene prices, the mainstream production cost for OCT in Shandong was approximately 9,455 yuan/ton. For some enterprises, production costs exceeded this mainstream level, resulting in losses of 355 yuan/ton for Shandong OCT ex-factory prices. Due to increasing industry losses, operating rates at OCT plants declined compared to levels during the National Day holiday. With propylene prices persisting at high levels, the loss situation for OCT is unlikely to ease in the short term, causing planned unit restarts for October to be delayed. By October 10, the OCT industry operating rate had fallen to 71%, a decrease of 6 percentage points from the holiday period.

On the downstream side, major plasticizer producers reduced operations during the National Day holiday, and unit restarts were slow after the break. By October 10, the operating rate for DOP decreased by 9 percentage points from pre-holiday levels, while DOTP operating rates fell by 4 percentage points. It is expected that plasticizer unit operating rates will recover next week, increasing rigid demand for OCT and slightly improving the market's supply-demand pattern.

III. Persistently High Costs Drive Gradual Upward Shift in OCT Market Center

Regarding raw materials, propylene output in Shandong has been continuously declining since early September, which is one of the main factors supporting the strong rise in propylene prices. Next week, factors such as maintenance shutdowns at Wanhua’s cracking units are expected to further reduce propylene production in the Shandong region, continuing to support propylene prices fluctuating at high levels. Consequently, sustained high costs will provide upward momentum for the OCT market.

On the downstream side, profit margins for major plasticizer products have shown significant improvement, and industry operating rates are expected to gradually rise, increasing rigid demand for OCT compared to early October. Furthermore, following mid-to-late October, there are plans for OCT units in East China to shut down, which will help move the OCT supply-demand fundamentals toward equilibrium. Future attention should focus on changes in propylene price trends and fluctuations in OCT unit operating rates.