Introduction: In early July, the domestic octanol market saw its decline halted and prices rebound. Due to a significant surge in feedstock propylene prices, octanol production suffered from severe cost inversion. Reduced operating rates at some plants signaled a halt in price drops, leading to improved low-price trading within the week. Concurrently, downstream plasticizer market orders boosted buying replenishment enthusiasm.
This week, the domestic octanol market experienced a decline followed by a rebound. As of Thursday, the Shandong market price stood at 6,900 RMB/tonne, reflecting a rebound of 400 RMB/tonne over the week — the largest increase since May. At the beginning of the week, octanol prices in Shandong fell to 6,500 RMB/tonne, the lowest point this year, with losses reaching nearly 800 RMB/tonne. With feedstock propylene prices rebounding sharply, octanol producers had no intention of further price reductions under the cost pressure. Market signals of a price floor encouraged downstream users and traders to replenish.
Midweek, a sharp rise in international crude oil prices further boosted market confidence. Due to severe losses, octanol plant operating rates gradually decreased to around 70%. Tight supply in the related product n-butanol prompted some producers to increase n-butanol output while reducing octanol production. Plants limited new orders this week, primarily servicing core customers. As prices gradually rebounded, traders began to offload profitable inventories, and spot market trading sentiment softened.
Recent operating statistics for major domestic octanol plants:
| Company Name | Operating Capacity (10k tonnes) | Plant Status |
|---|---|---|
| Daqing Petrochemical | 13 | Shutdown |
| Tianjin Bohua Yongli | 28+45 | 70%-80% |
| Shandong Hualu Hengsheng | 25 | 50% |
| Shandong Luxi Chemical | 49 | 50%-60% |
| Shandong Qilu Petrochemical | 25.5 | 60%-70% |
| Blue Sail Chemical | 14 | Shutdown |
| Dongming Dongfang | 10 | Shutdown |
| Nanjing Chengzhi (Jiangsu) | 44.5 | 70%, Phase I unit to shut next week |
| Jiangsu Huachang | 16+18 | 60%-70% |
| Anqing Shuguang | 33 | 60% |
As of this Friday, the domestic octanol plant capacity utilization rate stood at 71%. To mitigate losses and ease spot sales pressure, multiple units are operating at 60%-70% capacity. Next week, operating rates in Jiangsu will continue to decline, with the national average expected to drop to around 69%. With octanol supply gradually decreasing, supply-side pressure is anticipated to ease significantly from mid-month as per scheduled plant maintenance.
This week, prices of major downstream plasticizer products rose in line with feedstock octanol, improving plasticizer profitability. Plasticizer orders were robust in the first half of the week, leading to a recovery in plant operating rates. Both DOP and DOTP operating rates increased, boosting rigid demand procurement for octanol. Additionally, export orders for octanol are scheduled before month-end, further relieving domestic spot sales pressure.
Octanol Supply and Demand Forecast (10k tonnes)
| Data Type | Item | This Week | Next Week | Change |
|---|---|---|---|---|
| Supply | Production | 6.88 | 6.5 | -0.38 |
| Demand | Consumption | 6.5 | 6.8 | 0.3 |
| Supply-Demand Gap | Weekly Theoretical Balance | 0.38 | -0.3 | -- |
Based on the supply-demand outlook, next week spot octanol supply will fall short of demand, leading to a decline in industry inventory levels. However, given that high-priced plasticizers have seen mediocre trading, downstream buyers are only moderately active in spot octanol procurement, maintaining rigid demand purchasing.
Feedstock propylene prices remain elevated but are expected to tighten less next week, limiting upward momentum. Propylene prices may come under pressure gradually, easing cost pressure on octanol. The cost-driven support for octanol prices will therefore weaken.
In summary, the domestic octanol market fundamentals are improving next week. Following production cuts by major plants, spot sales pressure has eased, and producers are mainly servicing contract customers. Downstream plasticizer operating rates are expected to rise, increasing rigid demand. However, as octanol prices climb to higher levels, downstream buyers are cautious about procuring high-priced octanol, with limited enthusiasm for chasing up, which will cap the upside potential for price increases next week. With octanol cost pressure gradually easing, prices are expected to see a narrow uptick before stabilizing at a high level in a stalemate.
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