In the first half of 2024, the
Plasticizer industry chain showed a fluctuating trend after a high-level decline, with an overall high and low trend. March had the largest decline, taking DOTP as an example. From January to June, the average market price of DOTP in East China was 10735 yuan/ton, an increase of 854 yuan/ton or 8.64% compared to the same period last year, with a high point of 12325 yuan/ton in early January and a low point of 9600 yuan/ton in late March. The price difference between high and low ends was 2725 yuan/ton, which was slightly larger than the same period last year.
Characteristics of plasticizer market operation in the first half of 2024:
1. Under cost leadership, the market price of plasticizers tends to be high in the beginning and low in the end
Taking DOTP as an example, from Figure 2, it can be seen that the market trend of DOTP is highly consistent with the trend of its main raw material octanol, and its market trend follows the interval oscillation after the high level of octanol falls, with a larger decline in March.
2. Demand side performance fell short of expectations, with significant inventory accumulation in the first quarter
In addition to cost, demand side performance is also an important factor affecting market price changes. The overall demand for plasticizers in the first half of 2024 was flat. Affected by factors such as the overall downturn in the real estate industry, the operating rate of downstream PVC product companies remained relatively low in the first quarter, roughly at a low level of 40% to 60%. After the Spring Festival, the demand side was delayed and the overall recovery was not as expected. Although some plasticizer plants stopped during the Spring Festival, the supply mostly returned to normal after the holiday, and the industry's inventory accumulation was more obvious in the first quarter. Entering June, under the high temperature weather, the operating load of some downstream PVC wire and cable enterprises has decreased. As of now, the operating rate of downstream product enterprises has dropped to a relatively low level of about 45%, and the purchasing power of plasticizers has weakened.
3. The profitability of many products has decreased
The main profit of the plasticizer industry chain is still concentrated in the upstream end. In the first half of 2024, except for a slight improvement in DOP, the gross profit of other major plasticizer products such as DOTP decreased year-on-year and remained at a relatively low level overall. The cost of plasticizer products is at a high level, and downstream demand follow-up is insufficient. Some downstream users have limited acceptance of high priced raw materials, and there is a phenomenon of production enterprises offering small discounts for sales, resulting in a decline in the profitability of the industry.
4. Industry operating load rate shows mixed fluctuations
In the first half of 2024, the operating load rates of major plasticizers and related products fluctuated, with octanol showing the largest increase. The average operating load rate of the octanol industry in the first half of the year was 99.08%, an increase of 7.07 percentage points compared to the same period last year, while naphthalene phthalic anhydride showed the largest decrease. The average operating load rate of the naphthalene phthalic anhydride industry in the first half of the year was 62.04%, a decrease of 18.34 percentage points compared to the same period last year.
5. The terminal procurement strategy has undergone slight changes
The biggest change for end-users such as PVC wires and cables in the first half of 2024 compared to last year is that the overall sentiment of chasing price increases is not high. There is a mentality of buying price increases rather than buying price decreases among end-users in 2023. However, some end-users in 2024 expressed that the increase in orders did not meet expectations, and they were more cautious about raw material procurement under the expectation of the upstream octanol new plant being put into operation. The overall sentiment of chasing price increases is not high. After the market prices fall from high levels, some temporary essential needs will be replenished.
Outlook for the second half of the year:
The changes in cost and demand are still the main factors affecting the trend of the plasticizer market in the second half of the year
In terms of octanol: In the second half of the year, the octanol market is expected to show a downward adjustment trend in overall price focus. In the first half of the second half of the year, the downstream plasticizer and terminal PVC product industries are still in the traditional off-season of consumption, and the cost transmission of downstream industries is still limited. The industry is expected to maintain a relatively low level of production. The market is focused on multiple sets of new octanol production capacity, which may be put into operation from July to September. The industry is entering its second stage of expansion cycle in history, and significant changes in the supply side will gradually break the original pattern of the octanol market. From the perspective of market trends, it is expected that the volatility in the first half of the second half of the year will be relatively narrow, showing an overall trend of mixed ups and downs and fluctuating operations. Entering the second half of the year, it is expected that the market will stabilize with the operation of new production capacity, and the continuous release of supply increment will be the main driving factor. The market may show a worsening downward trend, and the industry will face the process of restructuring the supply and demand pattern as the price center continues to adjust downward.
In terms of n-butanol, it is expected that there is a high possibility of n-butanol first stabilizing at a high level and then declining in the second half of the year. In the third quarter, equipment maintenance and new equipment production coexist, and the supply and demand side is expected to have a significant impact on the market trend in the third quarter. The market may operate at a high level. In the fourth quarter, on the one hand, the production capacity of new facilities will be fully released, and on the other hand, the maintenance of existing facilities will be reduced. It is expected that there will be a significant increase in supply. In the second half of the year, the demand for n-butanol may show a trend of first decreasing and then increasing, or a negative correlation with market prices. After the fourth quarter, as the surplus increases, the impact of cost factors on n-butanol will increase. It is expected that the price range of n-butanol in the second half of the year will be between 6500-10000 yuan/ton, and the market may experience an accelerated decline in the fourth quarter. Judging from the changes in supply and demand, the high point of n-butanol in the second half of the year is likely to occur in July and August, and the low point may occur in December.
On the demand side: In high temperature weather, from July to mid August, some downstream industries such as PVC wires and cables may still have low operating loads, and the demand for plasticizers is relatively weak; Starting from late August, with the arrival of the Golden September and Silver October, the average operating load rate of downstream PVC wire and cable industries may increase, and the demand side will improve; In November and December, downstream industries such as PVC wires and cables were in the traditional off-season of production, resulting in a decrease in raw material procurement and a possible weakening of demand for plasticizers.
Based on the expectations of both the cost and demand sides, it is preliminarily estimated that the trend of major plasticizer products in the second half of the year will be basically consistent, with a mainly volatile downward trend. The lowest point may occur in December, while the highest point may occur in July August.
