Costs Decline—DOP Prices Stop Rising and Begin to Fall This Week

April 10th, News

This week, the price of plasticizer DOP in China stopped rising and fell.

According to the commodity market analysis system, as of April 10th, the DOP price was 10,275.83 CNY/ton, which first increased and then decreased compared to the DOP price of 10,259.17 CNY/ton on April 1st, with a price increase of 0.16%; and it decreased compared to the DOP price of 10,375.83 CNY/ton on April 8th, with a price decrease of 0.96%. Due to the geopolitical crisis in the Middle East, crude oil prices surged, and the impact quickly spread downstream along the industrial chain, leading to significant increases in the prices of isooctanol and phthalic anhydride, thereby increasing the cost of DOP and causing a substantial rise in the price of the plasticizer DOP. After the US and Iran agreed to a two-week ceasefire, crude oil prices fell, and the prices of downstream products responded by falling as well, with the prices of isooctanol and phthalic anhydride decreasing, leading to a reduction in DOP costs and a subsequent drop in DOP prices.

Crude oil prices are being passed down to downstream sectors.

As the deadline set by the Trump administration approached, on April 8, the United States and Iran announced a two-week ceasefire agreement, brokered by Pakistan. Under the agreement, the ceasefire took effect immediately, and Iran agreed to temporarily open the Strait of Hormuz to ensure global shipping safety. Delegations from both the U.S. and Iran will hold negotiations in Islamabad, the capital of Pakistan, on April 10. This news triggered sharp fluctuations in global commodity markets, causing crude oil prices to reverse their earlier gains and plunge sharply. However, due to damage to energy infrastructure in the Middle East and the slow pace of supply chain recovery, oil prices are unlikely to return to pre-conflict levels. As crude oil serves as the raw material for the chemical industry’s value chain, the drop in oil prices has rippled down to downstream sectors, driving down prices of isooctanol and phthalic anhydride.

Raw material iso-octanol prices stop rising and begin to fall.

According to the commodity market analysis system, as of April 10, the price of isooctanol was 9,200 CNY/ton, which first increased and then decreased compared to the price of 9,266.67 CNY/ton on April 1, with a price decrease of 0.72%; it also decreased from the price of 9,533.33 CNY/ton on April 7, with a price decrease of 3.50%. The ceasefire agreement reached between the United States and Iran led to a decline in crude oil prices, which in turn affected the downstream market, causing propylene prices to fall and, consequently, the cost of isooctanol to decrease.

Phthalic anhydride prices in China have stopped rising and started to fall.

According to the commodity market analysis system, as of April 10, the price of o-xylene phthalic anhydride in China was 9,333.33 CNY/ton, a 0.89% decrease from the price of 9,416.67 CNY/ton on April 1. The ceasefire between the U.S. and Iran led to a sharp drop in crude oil prices, which has put more downward pressure on the phthalic anhydride market. However, due to the frequent shutdowns for maintenance at o-xylene production facilities, such as Yangzi Petrochemical's o-xylene equipment in April and Jinling Petrochemical's planned maintenance in May, the supply of o-xylene has significantly decreased, limiting the room for further price drops. The rising cost of raw materials still supports the price of phthalic anhydride, and the support from plasticizer costs remains.

Future Market Expectations

The plasticizer product data analyst believes that, in terms of costs: with the decline in crude oil prices being passed on, the price of iso-octanol has also fallen, leading to a decrease in the cost of the plasticizer DOP. Looking ahead, it will be difficult for crude oil prices to return to their pre-conflict lows; as this impact filters down to downstream markets, the room for further declines in iso-octanol prices is limited. Moreover, given the continued support from rising phthalic anhydride prices, the raw material cost of DOP plasticizer will see only a limited reduction. Consequently, downward pressure on DOP plasticizer prices is relatively mild, and we expect DOP plasticizer prices to remain weakly stable in the near term.