【Preface】 In the first half of 2026, downstream demand for China's epichlorohydrin showed an overall weak trend, with insufficient growth momentum in the consumer market. According to industry data, influenced by external, macroeconomic, and end-use factors, downstream consumption of epichlorohydrin exhibited slow growth.
From the perspective of the downstream consumption structure in the first half of 2026, epoxy resin, as the core downstream of epichlorohydrin, dominated the market with a consumption share as high as 83%, reflecting the close relationship between the two. Fluctuations in the operating rates of the epoxy resin industry, order intake conditions, and price trends are all directly transmitted to the epichlorohydrin market through raw material procurement demand. Other consumption areas of epichlorohydrin, including TGIC and others, together accounted for approximately 17%. The overall scale of this market is relatively limited, and the consumption capacity of individual downstream applications for the raw material is weak, making it difficult to have a substantial impact on the overall demand pattern of epichlorohydrin. Therefore, changes in demand in these areas have only a minor supporting or dragging effect on the epichlorohydrin market, and the market's core focus remains on the fundamental trends of the epoxy resin industry.
1. Significant Supply-Demand Imbalance in the Main Downstream Epoxy Resin, with Capacity Utilization Remaining Low
In recent years, the supply-demand imbalance in the epoxy resin market has become increasingly severe, with capacity utilization consistently at low levels. The continuous release of new epoxy resin capacity has led to rapid supply growth. Data shows that in 2026, domestic epoxy resin capacity was around 4 million tons, but end-user demand growth fell far short of expectations.
In 2026, due to weaker-than-expected end-user demand growth, the enthusiasm of epoxy resin enterprises to operate was dampened, and capacity utilization continued to decline. The overall industry capacity utilization rate operated below 50%, highlighting the severe supply-demand contradiction and development difficulties facing the epoxy resin industry.
Comparison of production volume and capacity utilization changes in China's epoxy resin industry in the first half of 2026 (10,000 tons)
| Item | H1 2026 | H1 2025 | YoY Change |
|---|---|---|---|
| Total Production | 95.48 | 92.73 | 2.97% ↑ |
| Capacity Utilization Rate | 44.06% | 48.58% | Decrease of 4.52 percentage points |
In the first half of 2026, China's epoxy resin production was approximately 954,800 tons, a year-on-year decrease of 2.97% and a quarter-on-quarter decrease of about 10.92%, equivalent to an epichlorohydrin consumption of approximately 538,800 tons. The average operating rate of the epoxy resin industry in the first half of the year was around 44.06%. Among this, the average operating rate of liquid epoxy resin capacity was 46.62%. In February, due to the impact of the Spring Festival holiday, many epoxy resin plants temporarily shut down for maintenance, resulting in a seasonal low point in the industry. Overall downstream demand for epoxy resin in 2026 remained weak, constraining the industry's overall load to a relatively low level.
2. High Price and Low Volume of Domestic Epichlorohydrin, Export Volume Declined Year-on-Year
From January to May 2026, China's epichlorohydrin export volume showed a significant contraction, primarily suppressed by four core factors: tightening domestic supply, inverted domestic and international price differences, substitution by overseas local capacity, and weakening global end-user demand.
From the perspective of export data, during the 2025-2026 period, China's epichlorohydrin export volume showed a weakening trend. From January to May 2026, China's epichlorohydrin exports fell sharply by 64% year-on-year. Multiple factors jointly suppressed export sales. First, concentrated maintenance of domestic plants and reduced operating rates of glycerin-based plants due to losses led producers to prioritize the domestic market, significantly reducing available export volumes. Second, domestic spot prices were relatively high, forming a price inversion compared to countries like South Korea and Thailand, leaving no arbitrage space for exports. Third, the release of new local capacity in Southeast Asia, South Korea, and other regions improved regional self-sufficiency rates, shrinking import demand from China. Fourth, global downstream epoxy resin end-user demand was weak, and overseas purchasing and stocking enthusiasm was insufficient. These multiple factors collectively led to a sharp decline in export volume. From January to May 2026, China's cumulative epichlorohydrin export volume dropped sharply by 64% year-on-year, with the monthly figures from February to April all lower than the same period in 2025. The average monthly export price from January to May was approximately 1,841 USD/ton, an increase of 50% compared to the same period last year.
3. Increased Supply and Demand, Epichlorohydrin Continues the Pattern of Supply-Demand Imbalance
Statistics on China's epichlorohydrin supply-demand balance in the first half of 2026 (10,000 tons)
| Item | Jan-Jun 2026 | Jan-Jun 2025 | Change | YoY % Change |
|---|---|---|---|---|
| Production | 69.31 | 63.35 | 5.96 ↑ | 9.41% ↑ |
| Imports (E) | 0.32 | 0.03 | 0.29 ↑ | 966.67% ↑ |
| Total Supply (E) | 69.63 | 63.38 | 6.25 ↑ | 9.86% ↑ |
| Exports (E) | 1.57 | 4.35 | -2.78 ↓ | -63.91% ↓ |
| Consumption (E) | 63.68 | 58.19 | 5.49 ↑ | 9.43% ↑ |
| Total Consumption (E) | 65.25 | 62.17 | 3.08 ↑ | 4.95% ↑ |
| Supply-Demand Gap | 4.38 | 1.21 | 3.17 ↑ | 261.98% ↑ |
In the first half of 2026, China's epichlorohydrin market continued the pattern of supply-demand imbalance, with industry operations showing structural differentiation. From the supply side, new capacity continued to expand in the first half of the year. Although production increased by 5.96% year-on-year, the operating rates of plants using different process routes showed significant differences. Notably, the glycerin-based process continued to suffer losses, resulting in low operating rates, which dragged down the overall industry operating level. On the demand side, although some downstream sectors provided phased support, overall consumption growth was limited, offering insufficient support to the market. In terms of imports and exports, exports, as an important channel to alleviate domestic supply-demand surplus, fell sharply by 64% year-on-year in the first half of the year, further exacerbating the supply-demand contradiction in the domestic market, leading to a widening of the supply-demand gap in the first half.
4. Expected Widening of the Supply-Demand Gap in the Second Half of the Year
In the second half of 2026, the domestic epichlorohydrin capacity base is expected to further expand, with total domestic capacity projected to be around 2.8 million tons. The average monthly production of domestic epichlorohydrin in the second half of 2026 is expected to remain around 120,000 tons, with industry capacity utilization fluctuating between 45% and 50%. However, plant operations still face significant uncertainty. In addition, temporary shutdowns of plants due to cost pressures or unexpected failures will also periodically affect the pace of market supply.
The main downstream, epoxy resin, is expected to add about 230,000 tons of new capacity per year in the second half of the year, which will directly drive steady growth in epichlorohydrin consumption. Downstream consumption of epichlorohydrin in the second half of the year is expected to be around 400,000 tons. Although demand continues to grow, the growth rate of epichlorohydrin supply is faster than that of demand, exacerbating the supply-demand imbalance compared to the first half of the year, and the overall industry capacity utilization rate remains at low levels. In terms of imports and exports, as domestic overcapacity pressure becomes apparent, enterprises will accelerate overseas market expansion and enhance product competitiveness. It is expected that export volume in the second half of the year will increase compared to the first half, further alleviating domestic supply pressure.
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