On September 18th, the price of isooctanol was 9733.33 yuan/ton, which first increased and then decreased compared to the price of 8833.33 yuan/ton on September 1st, with a growth rate of 10.19%; Compared to September 15th, the price of isooctanol dropped by 9900 yuan/ton, a decrease of 1.68%. In September, isooctanol first surged sharply, and in mid month, the space for isooctanol to rise sharply was basically closed, and the price began to decline, entering a high-level oscillation game.
The geopolitical game in the Middle East
In September, the escalation of the US Iran maritime conflict led to a decrease in navigation volume in the Strait of Hormuz and a surge in oil tanker insurance premiums; In early September, the Houthi armed offensive intensified, and on September 10th, they captured the Red Sea ports of Muha and Hanish Islands, strengthening their control over the Mandeb Strait. Shipping in the Strait of Hormuz has been blocked, and the Saudi East West oil pipeline has been temporarily shut down due to an attack. The export of crude oil has been restricted, and the amount of crude oil that can be exported has significantly decreased. Insurance and shipping costs have risen significantly, amplifying expectations of tight supply. In mid September, pipeline repair is expected to heat up, and the risk premium will quickly dissipate. Oman led attempts to mediate the navigation of Hormuz, but no substantial ceasefire agreement was reached. The probability of extreme full-scale firing has decreased, leading to long positions taking profits and leaving the market. Geopolitical premiums have been reduced, and oil prices have fallen from high levels.
The cost of propylene fluctuates and rises
On September 18th, the propylene price was 9701 yuan/ton, a fluctuating increase of 5.13% compared to the propylene price of 9227.67 yuan/ton on September 1st. Affected by the geopolitical conflict in the Middle East, crude oil surged sharply in early September, and after reaching the $100 mark, oil prices quickly fell back, forming a cost floor for propylene and isooctanol. With the withdrawal of geopolitical premiums, propylene prices fluctuated and fell back. The driving force behind the cost increase of isooctanol has weakened.
Supply side
The overall operating rate of the isooctanol industry is 70% -75%, lower than the same period in previous years, and the supply expectation is tightening. In addition, Hualu has a maintenance plan in September, which provides strong support for the price in the first ten days; Mainstream large factories are implementing phased quantity control and limited order acceptance, resulting in a shortage of spot goods in circulation; After the price surged, downstream buying weakened, and manufacturers’ inventory began to accumulate slightly. In the middle of the month, the willingness to lower the price of isooctanol increased.
Demand side
The peak season of ‘Golden September’, but the actual demand falls short of the price increase. Downstream DOP production has slightly rebounded month on month, with a slight rebound in essential procurement and decent contract orders. However, there is a weak willingness to chase up spot prices. After octanol surged to a high level, downstream resistance to high prices mainly focused on inventory consumption and long-term contracts, resulting in weak spot transactions.
Future prospects
Analysts believe that the surge in raw material propylene in September, coupled with the peak season of supply contraction and demand, has caused multiple resonances and led to a strong bullish sentiment in the market. The price has reached a high point within the year, and downstream pressure has led to a refusal to chase after the rise, resulting in a cooling of spot transactions; After the upward trend was overdrawn, the quotation began to decline, and isooctanol fluctuated at a high level. In the future, the space for the sharp rise of isooctanol is basically closed, and there is a high risk of rapid decline in upstream crude oil and propylene. There is further downward pressure on isooctanol, but the supply and demand in the isooctanol market are tight, and the support for the bottom price of isooctanol still exists. The price of isooctanol is likely to fluctuate widely at a high level in the future.