Lead: Since July, with epichlorohydrin prices trending upward amid volatility, profit margins across different production routes have further recovered, strengthening the industry's overall supply willingness and prompting a gradual increase in operating rates. As of July 31, total domestic epichlorohydrin output reached 116,200 mt for the month, up 16,100 mt from June, representing a month-on-month increase of 16.08% and a year-on-year increase of 3.71%. The capacity utilization rate in July stood at 44.34%, up 4.87 percentage points from the previous month but down 6.96 percentage points from the same period last year. Although industry supply has grown, the overall operating level remains below that of the same period last year.
In July, the two mainstream production routes in the domestic epichlorohydrin market showed notable divergence in performance. For the propylene-based route, no substantial shutdowns occurred during the month, with only a few enterprises implementing phased minor load reductions, which had no notable impact on overall output. Additionally, supported by the phased weakening of upstream propylene feedstock prices and stable by-product revenues from liquid chlorine, the propylene-based route maintained considerable profitability, boosting producers' enthusiasm. As a result, the average capacity utilization rate of the propylene-based route rose to 99.63% in July, up 17.22 percentage points month-on-month, essentially at full-load operation. Evidently, the propylene-based route, with its cost advantages and robust profitability, holds a relatively clear competitive edge in the market.
In contrast, although the glycerol-based route was constrained by high feedstock glycerol prices, the rebound in epichlorohydrin prices improved its profit margins compared with earlier periods, enhancing producers' willingness to operate. Some previously idled units were progressively restarted or had their loads raised. The average capacity utilization rate of this route was approximately 41.89% in July, up 5.16 percentage points month-on-month, yet still far below a reasonable operating range.
In July, epichlorohydrin units with a combined annual processing capacity of 938,000 mt entered their maintenance cycles. During this period, the main feedstock glycerol saw firm upward price adjustments, while epichlorohydrin prices exhibited a volatile but firm pattern. Theoretical profit margins for epichlorohydrin across different routes continued to widen, particularly for the glycerol-based route, where some producers returned to profitability, further strengthening production willingness. As profit margins continued to recover, previously idled units were restarted, and some low-load units simultaneously increased their operating loads. Overall market supply trended upward, with the industry's capacity utilization rate improving month-on-month, which in turn reduced maintenance loss volumes. According to Chempricehub data, as of July 31, the total epichlorohydrin maintenance loss volume stood at 55,800 mt, down 14,000 mt month-on-month, a decline of 20.06%; year-on-year, this represented an increase of 200 mt, or 0.32%. The reduction in maintenance loss volumes this month was primarily attributable to further profit recovery, particularly the return to profitability of some glycerol-based producers, the successive restart of previously idled units, and load increases at some facilities, all of which raised operating enthusiasm during the period, thereby reducing maintenance losses.
Overall, the month-on-month decline in maintenance loss volumes was mainly driven by the further recovery of corporate profitability, especially the return to profitability of the glycerol-based route, which boosted production willingness and consequently reduced maintenance losses versus the prior month.
Looking ahead to August, the industry's capacity utilization rate and output are expected to show month-on-month growth. On one hand, epichlorohydrin prices are anticipated to remain volatile but firm in August, with industry profit margins continuing to recover and production willingness strengthening. On the other hand, the propylene-based route is expected to maintain high-load operation with no shutdown plans currently in place, while some previously idled glycerol-based units are scheduled to restart or raise loads in August. Overall, both the capacity utilization rate and output of the domestic epichlorohydrin industry are projected to grow in August versus July, with the average capacity utilization rate likely to hold at around 50% and output estimated at approximately 122,600 mt. Going forward, close attention should be paid to the operating pace of epichlorohydrin units and their upstream/downstream chains, as well as dynamic shifts in the industry's supply-demand landscape.
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