Introduction: Entering April, the focus of the octanol market in the Shandong region has mostly fluctuated around 9,000-9,200 yuan/ton. This week, the downward pressure on the octanol market has increased. For the first time this week, the ex-factory price of Shandong octanol fell below 9,000 yuan/ton, with spot transactions settling at 8,900 yuan/ton.

I. Octanol Market Consolidates at High Levels, Industry Profitability Remains Decent

Entering April, the focus of the octanol market in Shandong has mostly consolidated around 9,000-9,200 yuan/ton. This week, domestic octanol supply decreased due to maintenance shutdowns at three plants, causing prices to remain entrenched at the higher end of the range during the first half of the week. Poor transaction volumes in the primary downstream plasticizer market, coupled with reduced purchases of octanol spot goods by buyers, led merchants to take proactive orders at lower prices, which dragged down high-end listed prices. As domestic octanol plants under maintenance gradually resumed operations in the second half of the week, market supply increased, significantly increasing downward pressure on octanol. On Friday, the Shandong spot ex-factory price dropped to 8,900 yuan/ton. Due to persistently average transaction volumes in the downstream plasticizer market, downstream buyers showed cautious enthusiasm for purchasing low-priced raw materials.

From a supply chain profitability perspective, the profitability situation for octanol and its main downstream plasticizer products reversed in April. Taking the Shandong region as an example, the average profitability level for major octanol plants in Shandong in April was around 600 yuan/ton, while the profit margins for downstream plasticizers gradually declined. This was mainly because domestic end-users reduced purchases of high-priced plasticizer products, increasing the resistance to passing prices down the supply chain to end products. Meanwhile, octanol prices fluctuated at relatively high levels, compressing plasticizer profit margins to low levels. This week, the profitability of DOP and DOTP fell below 100 yuan/ton. The profitability of 2-Ethylhexyl Acrylate products remained substantial, and users of 2-Ethylhexyl Acrylate maintained a pattern of purchasing octanol on a need-to-buy basis at low prices.

II. Fundamental Weakening of the Octanol Market

1. Expected Increase in Octanol Market Supply

Next week, domestic octanol production and capacity utilization are expected to increase significantly. The octanol plants at Anqing Shuguang Phase II and Dongming Dongfang have both resumed normal production. Except for the Jilin Petrochemical and Qilu Petrochemical 85,000-ton plants, which are still shut down, all other plants are operating normally, and octanol capacity utilization will rise to 95%. Octanol production will also increase substantially compared to this week, with average daily output estimated at around 11,000 tons, approximately 1,500 tons higher than this week's daily average.

Before the May Day holiday, octanol supply in each region is being restored upwards, resulting in generally ample supply. The competitive pressure for spot sales in the market has increased. Therefore, producers are actively destocking and shipping goods before the holiday, causing the market focus to lack supply-side support.

2. Decline in Domestic and International Demand

Regarding domestic downstream and end-user demand, downstream DOP and DOTP units are operating at moderate loads. The operating rate of DOP plants in Shandong is expected to decline, reducing the rigid demand for octanol in the domestic market. Export orders are being delivered in succession during the middle and late part of this month, with only a small number of export orders remaining to be fulfilled. Consequently, at the end of April, foreign order demand will be lower than in the early and mid-month, with market transactions mainly concentrated on domestic buyers. End-users' intended purchase prices for plasticizers are low, leading to expectations of further declines in plasticizer product prices and profits, which indirectly drags down the focus of the octanol market. It is expected that after octanol prices fall to low levels, downstream users will replenish moderately, providing support to the market focus before the holiday.

3. Raw Material Propylene Prices Expected to Weaken, but Limited Scope for Decline

Following the consecutive decline in octanol market prices in the second half of the week, the product's profit margin has narrowed substantially. Propylene prices in East China are higher than those in the Shandong region. However, the price spread between East China and Shandong octanol has narrowed, meaning the cost pressure for octanol in East China is greater than that for plants in Shandong. Octanol is gradually approaching the cost line.

Conclusion: In summary, the supply-demand contradiction in the octanol market is beginning to emerge before the May Day holiday, with both supply and demand sides in a stalemate. As octanol market supply is expected to be stable moving forward, and buyer activity remains lackluster, octanol producers may further reduce prices to clear inventory. Cost support and downstream pre-holiday stockpiling will provide periodic support for the lower price range of the octanol market.