[Introduction] Since mid-April, driven by a combination of multiple positive factors such as costs, supply, and demand, market sentiment has been further boosted. The upward momentum for epichlorohydrin has continued to heat up, with manufacturers showing a strong inclination to hold prices firm, and transaction prices for new orders have been steadily rising. As of April 20th, the quoted price for epichlorohydrin in the Jiangsu region rose to 13,550 RMB/ton, up 2.26% month-on-month. However, downstream end-users have limited acceptance of high-priced raw materials, leading to generally cautious procurement. Market transactions are mainly small-scale, demand-driven spot orders, and high-priced cargo faces weakness in following through.

This week, the domestic epichlorohydrin market showed a trend of initial gains followed by stabilization, with an average weekly price of 13,550 RMB/ton, up 2.73% from the previous week. At the beginning of the week, high operating rates for the main raw material glycerol, along with favorable support from both the supply and demand sides of epichlorohydrin, created strong upward momentum. Market prices rose significantly, especially on April 20th, when the price in Jiangsu reached 13,550 RMB/ton, a single-day increase of 2.26%. However, downstream enterprises adopted a more conservative approach to raw material procurement, focusing on fulfilling contract volumes and making occasional spot purchases at lower prices, showing limited acceptance of high-priced materials. Mid-to-late week, negotiations for new orders gradually returned to a rational level, and market prices fluctuated within a range.

I. Market Supply Grows Steadily, but Spot Resources Remain Largely Controllable

This week, the overall supply in the domestic epichlorohydrin market showed a pattern of steady growth. During the period, production units in regions such as Shandong and Hubei flexibly adjusted their operating rates, with some enterprises raising rates while others lowered them simultaneously. Units in areas like Zhejiang and Guangdong remained shut down, leading to clear divergence in regional production operations. The offsetting effects of these bullish and bearish factors resulted in a slight expansion of marketable supply in the industry. According to statistics from chempricehub, the average capacity utilization rate for the epichlorohydrin industry this week was 54.16%, up 0.57 percentage points from the previous week. From April 17th to April 23rd, domestic epichlorohydrin production reached 28,600 metric tons, a month-on-month increase of 1.06%. Although industry supply increased somewhat, mainstream producers prioritized fulfilling long-term contract obligations and previous orders, keeping pressure on spot supply generally manageable. Simultaneously, with the Labor Day holiday approaching, there is an expectation of phased pre-holiday stockpiling demand from downstream industries. This has strengthened epichlorohydrin producers' determination to hold prices firm, effectively supporting the market.

II. Epichlorohydrin Prices Rise, Further Repairing Theoretical Profits of Different Processes

This week, domestic epichlorohydrin market prices moved up, while cost support from raw materials remained evident across different process routes. However, the magnitude of the epichlorohydrin price increase outpaced the rise in raw material costs, thereby simultaneously driving an improvement in the theoretical profit margins of different processes. As of April 23rd, the average production cost for the propylene-based epichlorohydrin process was 9,733 RMB/ton, with an average profit of 3,617 RMB/ton during the period, an increase of 552 RMB/ton compared to the previous period, up 18.01% month-on-month. Losses for the glycerol-based epichlorohydrin process continued to narrow, with the average theoretical profit for this period recovering to -570 RMB/ton, an increase of 460 RMB/ton compared to the previous period, up 44.66% month-on-month. Overall, the stronger market trend led to a phased improvement in corporate profitability, optimizing the industry's profit structure to a certain extent.

III. Demand from Major Downstream Epoxy Resin Sector Sees Slight Improvement

This period, the maintenance unit at Guodu (Kunshan) concluded and restarted, with no new maintenance units, resulting in an overall increase in market supply. The average weekly capacity utilization rate for the domestic epoxy resin industry was 45.32%, up 0.36 percentage points from the previous period. Weekly production reached 37,400 metric tons, up 0.81% month-on-month. Although supply from the major downstream epoxy resin sector increased, its procurement of the raw material epichlorohydrin remained conservative. Companies generally focused on digesting their own inventories, only making occasional spot purchases at lower prices and showing limited acceptance of high-priced raw materials. This exerted a certain drag on the epichlorohydrin market.

IV. Short-Term Outlook: High Probability of Epichlorohydrin Stabilizing with a Weakening Bias

Domestic epichlorohydrin market is expected to operate stably with a weakening bias next week. Intertwined bullish and bearish factors are likely to limit the scope of price adjustments. Cost-side changes for epichlorohydrin in the coming week are anticipated to be minimal, still providing underlying support. Additionally, next week, planned maintenance at a major factory in the Jiangsu region, combined with other enterprises focusing on order fulfillment and facing no pressure from spot supply, will provide some market support. However, weak downstream demand is expected to significantly suppress the market. Consequently, in the tug-of-war between bullish and bearish factors, high-priced epichlorohydrin transactions face obstacles, and negotiations for new orders are likely to gradually return to rationality. Market prices are likely to stabilize with a weakening bias. Nevertheless, attention should be paid to changes in market costs, supply-demand dynamics, and sentiment.