Introduction: The price gap between octanol and n-butanol gradually widened in August, with the two product markets showing clear differentiation. Factories adjusted their product output ratios to maintain healthy profits.
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1. Octanol-n-butanol price gap and profit expansion
Figure 1 Comparison of Octanol and n-Butanol Price Trends (Yuan/ton) Figure 2 Comparison of Octanol and n-Butanol Profit Trends (Yuan/ton)
Data source: Longzhong Information Data source: Longzhong Information
The octanol market continued to fluctuate in the second half of the year . The ex-factory price of octanol in Shandong Province was operating between 7,300 and 7,600 yuan/ton, a narrow range that persisted at the end of the third quarter. The market for a related product, n-butanol, continued to decline, with prices dropping to a five-year low. In early August, n-butanol fell below the cost line, reaching a minimum ex-factory price of 5,500 yuan/ton in Shandong. The price gap between octanol and n-butanol widened to 1,700-1,800 yuan/ton. Considering production costs, a price difference of 800-1,000 yuan/ton between the two products is within a reasonable range. With n-butanol prices gradually falling below the cost line in August, octanol still maintains a relatively stable profit margin. Consequently, the price gap between the two products has attracted considerable market attention.
2. The core factor of the abnormal price increase: significant differentiation on the supply side
Figure 3 Monthly production trend of n-butanol (10,000 tons) Figure 4 Octanol monthly production trend chart (10,000 tons)
Data source: Longzhong Information Data source: Longzhong Information
1. From June to August, with the completion of plant maintenance, the supply of n-butanol showed an increasing trend, with output increasing for three consecutive months. In early August, the n-butanol capacity utilization rate increased to over 90%, reaching a relatively high level this year.
Ningxia Jiuhong Chemical's new 100,000-ton-per-year n-butanol plant commenced trial operation in July and is currently ramping up to full capacity. The plant primarily supplies downstream factories in Henan. With continued influx of Northwest China into the Henan market, Henan's demand for n-butanol from Shandong has decreased by approximately 8,000 tons per month. As a result, pressure is gradually emerging in the Shandong n-butanol spot market, leading to a slowdown in shipments from some manufacturers and a shift in the regional supply and demand landscape.
3. Octanol plants have experienced significant unexpected fluctuations, leading to a prolonged tightening of spot octanol supply across various regions. Since April, domestic octanol plants have experienced both planned and unplanned maintenance shutdowns, resulting in significant supply losses. Maintenance losses increased monthly from April to July. In July, the industry's operating rate dropped to 78%, the lowest level this year.
3. Different performance on the demand side
Figure 5 Monthly trend chart of downstream operating rate of n-butanol Figure 6 Monthly trend chart of octanol downstream operating rate
Data source: Longzhong Information Data source: Longzhong Information
Butyl esters, the downstream product of n-butanol, are experiencing low demand during the off-season, leading to high inventories. Some downstream companies have resorted to suspending production or reducing output to manage inventory levels. In August, the operating rate of n-butanol downstream production remained at medium to low capacity, indicating subdued demand in the n-butanol market.
The operating capacity of octanol's downstream plasticizers remained relatively resilient, with moderate demand. In July, some downstream plants reduced production due to insufficient raw material supply. In August, as octanol supply recovered, the operating capacity of octanol's downstream plasticizer plants also increased.
4. The supply and demand structure is rebalanced, and the price difference is expected to return to the normal range
The current profit structure of butanol and octanol co-production plants reveals a significant industry divergence. n-Butanol production has fallen into a cost-inverted trap, while octanol maintains a profit margin of 400-500 yuan/ton. Within this unbalanced profit structure, leading manufacturers are adjusting their butanol and octanol output ratios, proactively reducing n-Butanol production and increasing octanol production to alleviate sales and inventory pressures caused by an oversupply of n-Butanol.
On the other hand, n-butanol prices are currently at their lowest point this year, leaving loss-making factories with no room for profit-sharing. Some users are restocking on dips, which has a stabilizing effect on market sentiment and trading sentiment. The bottom support for n-butanol prices is gradually strengthening, and the market center of gravity is expected to slowly rise.
In contrast, while the octanol market maintains profitability, supply is gradually recovering, and with new plants expected to come online in the fourth quarter, supply pressure will gradually become more pronounced, accumulating downside risks for the market. As domestic octanol supply increases in the future, export orders may shift back to China, easing domestic competitive pressure to some extent.
In the medium term, with the rebalancing of the supply and demand structure of 1,2-butanol and the adjustment of corporate production strategies, the price gap between the two is expected to gradually narrow and is expected to return to a normal and reasonable range.
