Introduction: At the end of May, several octanol units in China reduced production due to significant cost pressures, causing the industry operating rate to fall below 70%. The expectation of declining demand affected market sentiment, with sellers actively promoting spot sales. This led to another loosening of the octanol market center. Despite substantial production cuts, the cost pressure on octanol has not been significantly alleviated.

I. Decline in Industry Production Enthusiasm

[Figure 1: Comparison of Monthly Octanol Output and Operating Rate, 2025-2026 (10,000 tons)]
[Source: chempricehub]

In terms of octanol operating rate and output, the domestic octanol operating rate dropped notably in May, with a monthly average of 78%, down 13 percentage points month-on-month and only higher than that of November last year. The decline in octanol capacity utilization this month is mainly due to the fact that after the commissioning of new capacity, demand did not keep pace; instead, consumption showed a weak trend. Octanol output could not be absorbed in a short time, leading to inventory accumulation and increased market competition. The market center's losses gradually widened, reducing enterprise production enthusiasm. Several units in North China, Shandong, and East China reduced production to mitigate losses and ease sales and inventory pressures. Although the capacity utilization rate dropped significantly, May's octanol output was still higher than in April. Overall, octanol output from January to May 2026 was higher than the same period last year, maintaining a loose supply pattern. Under such supply conditions, downstream buyers were unlikely to place large orders.

II. Tug-of-War Between Costs and Demand

After major octanol enterprises reduced their operating loads, the market continued to face significant cost pressures. Although the price of raw material propylene showed a downward trend, the decline was slow, providing limited relief from cost pressures. On the downstream side, operating rates for both plasticizers and 2-ethylhexyl acrylate declined, leading to a decrease in octanol demand for essential consumption. Consequently, cost pressures in the octanol market could not be effectively transferred downstream.

[Figure 2: Comparison of Octanol Cost and Profit in China, 2025-2026 (RMB/ton)]
[Figure 3: Operating Rate Trends of Octanol and Key Downstream Products in China, 2026]
[Source: chempricehub]

After mid-May, the octanol market center declined rapidly, while raw material propylene edged down slowly over the same period. During this interval, octanol prices fell by 1,100 RMB/ton, while propylene only dropped by 200 RMB/ton. During the production cut phase, octanol prices rebounded slightly but came under pressure again at the end of the month, resulting in a continued severe loss situation in the octanol market. Supported by reduced plant operating loads and high costs, the octanol market remained weak, with tepid buying interest.

The downstream plasticizer and 2-ethylhexyl acrylate markets performed poorly due to weak end-user demand. Plasticizer and 2-ethylhexyl acrylate units reduced their operating loads. The 2-ethylhexyl acrylate product experienced severe negative margins, with its operating rate dropping to less than 50%, a significant decline. With sharp fluctuations in international crude oil prices, buyers only maintained purchases for essential needs. June is the off-season for downstream demand, and with expectations of further demand declines, buyers showed low enthusiasm. Additionally, as a new contract cycle began, downstream buyers' demand for octanol spot decreased, prioritizing contract raw material execution.

III. Demand-Side Dominates Market Influence

In the short term, although raw material propylene is expected to decline, the downward pace will be slow, making it difficult for octanol costs to loosen significantly; the cost line remains high. Affected by this, octanol units are expected to maintain medium operating loads to balance sales and cost pressures. In early June, some units that had been under maintenance restarted, leading to a slight recovery in output. However, industry inventories are declining slowly, and the supply side overall remains tight.

On the demand side, June and July are the traditional off-season for demand. End-user consumption of plasticizers is expected to decrease, and the operating rate of plasticizer units is projected to decline. Meanwhile, downstream users will prioritize executing raw material contracts in early June, showing weak willingness to purchase spot materials. This will put pressure on spot market negotiation sentiment.

In summary, the short-term octanol market will be caught between high costs and weakening demand. Although cost factors provide some bottom support, the off-season for demand combined with thin spot trading leaves the market without upward momentum. The octanol market is expected to operate weakly in the near term. Industry participants are keeping an eye on the actual extent of propylene price declines and changes in downstream operating rates.