1、 Overview of octanol market production and supply-demand relationship in 2023

In 2023, influenced by various factors, the octanol industry experienced a decline in production and an expansion of the supply-demand gap. The frequent occurrence of parking and maintenance devices has led to a negative annual increase in domestic production, which is a rare occurrence in many years. The estimated total annual production is 2.3992 million tons, a decrease of 78600 tons from 2022. The utilization rate of production capacity has also decreased, from over 100% in 2022 to 95.09%.

From a production capacity perspective, calculated based on a design capacity of 2.523 million tons, the actual production capacity is higher than this number. However, the increase in new production facilities has led to an increase in the production capacity base, while new facilities such as Zibo Nuo Ao only started production at the end of the year, and the release of production capacity in Baichuan, Ningxia has been postponed until early 2024. This has led to a decrease in the operating load rate of the octanol industry in 2023 and a loss in production.

2、 Deep analysis of the supply and demand relationship of octanol

1.Production decline and supply-demand gap: Although the production of new facilities has been delayed and some renovated facilities have not been put into operation as scheduled, the steady growth of downstream demand began to emerge after the fourth quarter, providing support for the octanol market. From July to September, due to centralized maintenance, the supply decreased significantly, while the increase in demand led to an increase in the negative level of the supply-demand gap.

2.Main downstream demand analysis: The popularity of the plasticizer market has rebounded, and the overall demand is showing an upward trend. From the supply and demand of major downstream products such as DOP, DOTP, and isooctyl acrylate, it can be seen that the supply of DOP is increasing significantly, with a total production increase of 6%, making a significant contribution to the growth of octanol consumption. The production of DOTP has decreased by about 2%, but there is little overall fluctuation in the actual demand for octanol consumption. The production of isooctyl acrylate increased by 4%, which also contributed to the growth of octanol consumption.

3.Fluctuations in upstream raw material prices: The supply of propylene continues to increase, but its price has fallen significantly, widening the gap with the price of octanol. This alleviates the cost pressure on the octanol industry, but also reflects the differences in upstream and downstream operating trends.

3、 Future market outlook and uncertainty of new production capacity

1.Supply side outlook: It is expected that the release of new production capacity will face uncertainty in 2024. It is expected that most of the Anqing Shuguang expansion facilities and new satellite petrochemical facilities may need to be released in the second half of the year to the end of the year. The renovation equipment of Shandong Jianlan may be delayed until the end of the year, which makes it difficult to relax the supply capacity of octanol in the first half of the year. Due to factors such as spring maintenance, it is expected that octanol will continue to operate strongly in the first half of 2024.

2.Boosting expectations on the demand side: From a macro and cyclical perspective, downstream demand is expected to be boosted in the future. This will further consolidate the tight supply-demand balance pattern of octanol and increase the probability of the market operating at a mid to high level. It is expected that the market trend in 2024 will likely show a trend of high in the front and low in the back. In the second half of the year, with the release of new production capacity to the market supply and the expectation of cyclical decline in downstream demand, the price side may face certain adjustments.

3.Future overcapacity and declining market focus: In the coming years, the planned production of multiple octanol units will become more concentrated. At the same time, downstream demand expansion is relatively slow, and the industry surplus situation will intensify. It is expected that the overall operational focus of octanol will decrease in the future, and the market amplitude may narrow.

4.Global commodity price outlook: It is expected that the downward trend of global commodity prices may slow down in 2024. There may be a new round of commodity bull market, but this round of bull market may be relatively weak. If unexpected events occur during the economic recovery process, commodity prices may adjust.

Overall, the octanol market is facing challenges of declining production and expanding supply-demand gaps in 2023. However, the steady growth of downstream demand has provided support for the market. Looking ahead, it is expected that the market will continue to maintain a strong operating trend, but it may face adjustment pressure in the second half of the year.

Looking ahead to 2024, the global trend of commodity price decline may slow down, and prices will generally show an upward trend in 2024. There may be another round of commodity bull market, but the level of the bull market may be relatively weak. If some unexpected events occur during the economic recovery process, commodity prices are also likely to decline and adjust. It is expected that the operating range of Jiangsu octanol will be between 11500-14000 yuan/ton, with an average annual price of 12658 yuan/ton. It is expected that the lowest price of octanol for the whole year will appear in the fourth quarter, at 11500 yuan/ton; The highest price of the year appeared in the second and third quarters, at 14000 yuan/ton. It is expected that from 2025 to 2026, the average annual prices of octanol in the Jiangsu market will be 10000 yuan/ton and 9000 yuan/ton, respectively.