Cost support decreases, April DOP prices stop rising and fall

April 29th, news:

April Plasticizer DOP Prices Stop Rising and Fall in China

According to the commodity market analysis system, as of April 29, the DOP price was 10,050.83 CNY/ton, down 2.03% from the DOP price of 10,259.17 CNY/ton on April 1. In April, the Chinese DOP market showed a high-level fluctuation and a slight decline, with prices remaining at a high level for the year. However, due to cost adjustments and weak demand, there was insufficient momentum for a price increase, resulting in a slight weakening within the month.

Crude oil prices are being passed down to downstream sectors.

Crude oil prices experienced volatile declines following the U.S.-Iran ceasefire agreement, prompting a pullback in propylene prices, which in turn affected the iso-octanol market. In April, the price of iso-octanol fell from 9,582 CNY/ton to 8,933 CNY/ton, representing a monthly price decrease of 6.77%. This decline weakened the cost support for DOP, making it the primary driver behind the price correction.

April raw material isooctanol prices fluctuated and fell in China

According to the commodity market analysis system, as of April 29, the quoted price of isooctanol was 8,866.67 CNY/ton, down from 9,266.67 CNY/ton on April 1, representing a price decrease of 4.32%. Driven by the linkage between crude oil and propylene prices, changes in supply-demand dynamics, and the downward shift in the price trendline, the isooctanol market has shown a clear downward trend. Overall, the isooctanol market in April exhibited a pattern of "high-level fluctuations, initially strong then weakening."

Phthalic anhydride market fluctuates and declines in China.

According to the commodity market analysis system, as of April 29, the price of ortho-phthalic anhydride in China was 8966.67 CNY/ton, a 4.78% decrease from the price of 9416.67 CNY/ton on April 1. The easing of ceasefire negotiations between the United States and Iran has reduced geopolitical risks, which have been passed on to downstream markets. Coupled with insufficient demand, the price of ortho-phthalic anhydride has significantly declined. However, due to the large number of ortho-xylene production facilities undergoing maintenance and shutdowns, there is a serious reduction in the supply of ortho-xylene, leading to continued support for its price. This cost support limits the potential for further declines in the price of ortho-phthalic anhydride.

April DOP Market Supply and Demand Analysis

In April, the DOP market in China showed a supply and demand pattern characterized by "oversupply and weak balance of rigid demand": the supply side saw a decrease in production, but the total volume was still sufficient, with high inventory levels and limited exports. On the demand side, rigid demand remained stable, but there was a lack of new demand, cautious purchasing, and weak end-user demand. Overall, the supply was loose, with weak demand, oversupply, and prices under pressure at high levels, making it easier for prices to fall than to rise, supported only by costs and exports.

Supply Side: Relatively Loose Supply, Inventory Under Pressure

The plasticizer enterprise DOP facility operating load in April showed a trend of "initial stability followed by a decline, with a slight recovery at the end of the month." At the beginning of the month, the industry's operating rate was 65%–69%, with major manufacturers running at full capacity, ensuring stable supply. Mid-month, profits contracted and demand weakened, leading some enterprises to reduce loads or undergo maintenance, resulting in an operating rate drop to around 55%. Towards the end of the month, some facilities restarted, causing the operating rate to slightly recover to 60%, but still below the level at the beginning of the month. Despite the decline in production in April, the overall supply remained loose due to accumulated inventory from previous periods and effective supply, without any regional shortages. Additionally, as downstream purchasing slowed down, manufacturers' inventories continued to rise, increasing their willingness to lower prices to sell, thus suppressing price rebounds.

Demand Side: Strong basic demand, insufficient new demand, and overall weakness.

In April, downstream demand was mainly driven by rigid needs, lacking support from new orders. The demand in basic sectors such as wire and cable, and packaging films remained stable, with companies maintaining low-level restocking. However, affected by the sluggish real estate industry, the demand for terminal products like PVC pipes and profiles shrank. Some small and medium-sized enterprises in North China and East China experienced shutdowns and holidays, further suppressing the demand for DOP. Downstream companies adopted a cautious purchasing attitude, generally following a strategy of "not chasing high prices, not stockpiling, and buying as needed," leading to a weak market with thin trading volumes, making it difficult to support price increases.

Market Overview and Future Expectations

Plasticizer product data analysts believe that at the beginning of April, influenced by the strong rise in March, the market sentiment was bullish, with manufacturers holding firm on prices and traders reluctant to sell. By the end of the month, prices stabilized, and the market entered a wait-and-see phase, with downstream buyers replenishing stocks as needed, and overall cautious sentiment dominating the market.

For the future market, on the cost side: Affected by the aftermath of the geopolitical situation in the Middle East, the prices of crude oil and propylene are expected to remain at high levels with wide fluctuations. The price of isooctanol may see a slight rebound, and the price of phthalic anhydride is expected to continue. The cost support remains, limiting the downward space for DOP prices. On the supply side, some DOP plants that were under maintenance in May will restart, and the operating rate is expected to rise to 65%, further easing the supply. On the demand side, the downstream PVC industry is still in the maintenance season, and the operating rate of PVC is expected to drop to around 77%. Terminal demand has not shown significant improvement, and the downstream is still mainly focused on rigid demand procurement. The oversupply situation continues. In the short term, the bearish sentiment persists, and traders are still mainly reducing positions when prices are high. Manufacturers' willingness to hold prices firm has weakened, and the overall cautious sentiment among downstream buyers dominates, making it difficult to generate upward momentum. It is expected that DOP prices will slightly fluctuate and decline in the future.