[Introduction]: In the second half of May, domestic epichlorohydrin prices showed a rapid decline. Multiple bearish factors including cost, supply, and demand exerted pressure, further intensifying market competition. The ex-factory price (acceptance) in the Shandong market dropped from 12,400 yuan/ton on May 15 to 10,950 yuan/ton, a decrease of 1,450 yuan/ton, down 11.69%. Although prices have continuously fallen to low levels, bearish news are difficult to dissipate, and there are no signs of improvement in the short term. The market is expected to continue a weak downward pattern.

I. Supply: Persistent price declines lead to increased plant shutdowns during the period

Table 1 Epichlorohydrin shutdown and maintenance statistics (10,000 tons/year)

| Product | Enterprise | Capacity | Remarks |
| --- | --- | --- | --- |
| Epichlorohydrin | Jiangsu Haixing | 13 | Shut down in mid-May, expected to restart around June 5 |
| | Shandong Minji | 10 | Shut down on May 8, restart date TBD |
| | Hebei Zhuotai | 3.5 | Shut down on May 15, restart date TBD |
| | Huizhou Shengda | 6.3 | Shut down since February, restart date TBD |
| | Zhejiang Zhenyang | 6 | Shut down on May 28, restart date TBD |
| | Dongying Liancheng | 3 | Shut down evening of May 29, planned for 3 days |

Data source: chempricehub Info

From the supply side, as of May 28, domestic epichlorohydrin output reached 114,800 tons, a decrease of 6,600 tons from April, down 5.44% month-on-month and down 1.26% year-on-year. Capacity utilization was 48.69%, down 3.45 percentage points from the previous period and down 4.52 percentage points from the same period last year. After the May Day holiday, due to bearish market expectations and persistent losses in the glycerin-based process, plants such as Shandong Minji, Hebei Zhuotai, and Jiangsu Haixing successively shut down for maintenance. By the end of the month, approximately 418,000 tons/year of capacity was shut down. Meanwhile, some glycerin-based plants experienced load reduction and output cuts. However, due to the accelerated price decline in the second half of May, the overall industry supply decreased significantly.

Table 2 Comparison of domestic epichlorohydrin output and capacity utilization in the second half of May (10,000 tons)

| Item | 2026/05/22-05/28 | 2026/05/15-05/21 | Difference | Month-on-month | E June 4 |
| --- | --- | --- | --- | --- | --- |
| Output / 10,000 tons | 2.38 | 2.53 | -0.15 | -5.93% | 1.99 |
| Capacity utilization | 45.05% | 47.93% | -2.88% | - | 57.90% |

Data source: chempricehub Info

In the second half of May, the domestic epichlorohydrin market supply showed a decreasing trend. During the week of May 28, plants in Shandong, Jiangsu, and Hebei remained shut down; Zhejiang Zhenyang's 60,000 tons/year glycerin-based plant shut down on May 28, restart date TBD; Dongying Liancheng's 35,000 tons/year propylene-based plant planned to stop feeding on the evening of May 29, with a scheduled shutdown of about 3 days. This continued the declining trend in overall industry supply. The average capacity utilization for the period was 45.05%, down 2.88 percentage points from the previous week; from May 22 to 28, domestic epichlorohydrin output was 23,800 tons, down 5.93% month-on-month.

Going forward, as losses in the glycerin-based process widen further, industry load reductions and plant shutdowns are increasing. Shandong Befar's 75,000 tons/year plant plans to shut down for maintenance in early June, expected to last about half a month; additionally, some plants are operating at low loads. Overall, the subsequent epichlorohydrin market supply is expected to continue shrinking.

II. Demand: Weak downstream suppresses market sentiment; limited support under off-season expectations

From the demand side, in May 2026, the domestic epoxy resin market experienced a broad decline and weak operation, with sluggish trading and increasing operational pressure on the industry. This round of price decline mainly stemmed from insufficient cost support. The prices of core upstream raw materials continued to weaken, continuously lowering the cost center and dismantling the original cost support system. Demand remained weak. Concentrated advance stockpiling by downstream users in March-April overdrew phased procurement demand. Combined with the low sentiment in end-user industries, the market only had essential demand, which was insufficient to support prices. Affected by the price decline, the market psychology of "buying on rising, not on falling" spread, further exacerbating the weak trend.

Weak demand and low purchasing willingness made it difficult for companies to sell their products, leading to rising inventories. Since the end of May, many production enterprises adjusted their production plans, controlling output and reducing inventory through temporary shutdowns and load reductions. The overall industry operating rate gradually fell back. In May, epoxy resin output and capacity utilization increased month-on-month. Domestic epoxy resin output was 169,400 tons, up 3.17% month-on-month and down 7.48% year-on-year; capacity utilization was 46.35%, up 1.42 percentage points month-on-month and down 9.33 percentage points year-on-year. The main reasons for the month-on-month increase in epoxy resin output and capacity utilization in May were: epoxy resin plant maintenance shutdowns were concentrated at the end of the month, resulting in lower total monthly maintenance loss compared to April, and the new capacity from Shandong Yirui Yi had a longer normal operating cycle in May.

Going forward, due to limited end-user demand, epoxy resin enterprises face sales pressure, with cumulative inventories at high levels. Additionally, considering cost and profit, the phenomenon of load reduction or plant shutdown is increasing. Capacity utilization is expected to decline, which will further suppress the epichlorohydrin market.

III. Cost and Profit: Profits continue to compress across different processes, with losses widening for the glycerin-based route

In the second half of May, the main raw materials for the propylene-based process, propylene and liquid chlorine, showed a high-to-low downward trend. Cost support weakened, and coupled with the broad decline in epichlorohydrin prices, the average profit for the propylene-based epichlorohydrin process was 2,414 yuan/ton, down 23.49% from the first half of the month. Although profit margins shrank, they remained substantial. The cost of the glycerin-based process continued to be weak, but in the first half of May, epichlorohydrin prices were consolidating at high levels, resulting in an average profit of -250 yuan/ton. Entering the second half of the month, the decline in epichlorohydrin prices accelerated, further widening the loss. The average profit shrank to -959 yuan/ton, a decrease of 283.6% from the first half of the month.

Going forward, the price of the main raw material glycerin is expected to decline in June. The loss-making state of the main glycerin-based epichlorohydrin process will be difficult to change in the short term, which will exert bearish pressure on epichlorohydrin and also have a certain impact on supply-side plant loads.

IV. Outlook: Bearish news continues to pressure; weak downward trend likely to persist

Looking into June, the price of the core raw material glycerin is expected to continue its downward trend, further alleviating cost pressure for epichlorohydrin. Against the backdrop of persistently falling glycerin and epichlorohydrin prices, losses for glycerin-based plants will widen further. Load reductions or shutdowns of glycerin-based units will gradually appear, leading to a decreasing overall supply. However, inventory pressure at the main downstream epoxy resin enterprises is prominent, with load reductions and shutdowns becoming evident. Capacity utilization is likely to decline, forming bearish pressure on epichlorohydrin. Considering the three factors of cost, supply, and demand, the epichlorohydrin market price is expected to continue its weak downward trend in June. After mid-month, the decline may narrow as supply contracts.