Pre-holiday inventory buildup fell short of expectations; the epichlorohydrin market remained weak with narrow-range fluctuations.

Introduction: As the National Day holiday approaches, the domestic epichlorohydrin (ECH) market is characterized by weakening cost support, insufficient demand follow-through, and relatively ample supply. Current market conditions indicate a significant compression in profit margins across different process routes. Notably, losses for glycerol-based processes have widened further, resulting in low production enthusiasm among enterprises. Amidst weak demand, inventory levels at some companies are gradually accumulating. Combined with proactive inventory reduction efforts prior to the holiday, this has led to price concessions and downward pressure on market prices.

Table: ECH Market Price Statistics (Unit: CNY/ton)

Data Source: Chempricehub Information

I. Cost Side: Cost Support Remains, but Losses Widen for Mainstream Processes

Currently, the primary raw material, glycerol, is affected by both high international prices and insufficient demand support. High-priced cargoes face difficulties in transaction, leading to a narrow-range fluctuating downward trend in market prices. Despite the overall weak market sentiment, glycerol still provides certain bottom-level support for ECH. As of September 21, the delivered price for 99.5% purity glycerol in East China was 9,000–9,150 CNY/ton, down 25 CNY/ton from early September. The theoretical cost of ECH stood at 12,075 CNY/ton. Meanwhile, pre-holiday downstream inquiries were limited, intensifying market competition and driving prices down. Profit margins have compressed further to -925 CNY/ton, a narrowing of 75 CNY/ton compared to the start of the month, indicating a continuous widening of losses.

II. Supply Side: Lack of Demand Support Leads to Ample Overall Supply

Prior to the holiday, the operating load of domestic ECH units rose to approximately 48%, an increase of 1.61 percentage points compared to mid-early September, enhancing supply capacity relative to previous periods. With increased unit loads combined with persistently weak downstream demand, spot supply has gradually shifted towards looseness, and some manufacturers have begun accumulating inventories. Consequently, supply-side support for prices has weakened. To control inventory and promote sales, manufacturers have adopted more flexible sales strategies, showing a clear willingness to offer discounts on new orders, which has further intensified downward price pressure in the market.

III. Demand Side: Epoxy Resin Loads Increase, Driven Primarily by Rigid Demand

Weak downstream demand remains the core issue constraining the upward movement of the ECH market. Currently, the key downstream product, epoxy resin, is squeezed by high costs, causing profit margins to shrink continuously, with most producers operating at a loss. Although capacity utilization rates have recently risen to around 50%, enterprises are primarily consuming contract volumes and existing inventories, with limited spot procurement. Reports indicate that current epoxy resin production focuses on fulfilling September orders, with no significant inventory pressure yet. However, limited October orders have made downstream buyers cautious about post-holiday ECH procurement, focusing mainly on replenishing stocks when prices dip. Additionally, approaching traditional holidays, the downstream market has not seen the usual pre-holiday stockpiling rush. To mitigate risks, downstream sectors are maintaining only rigid demand follow-through, with no obvious incremental positive signals released.

IV. Outlook: ECH Market Center Under Pressure Pre-Holiday

In summary, the main contradiction in the pre-National Day ECH market lies in the dual drivers of weakening cost support and intensifying supply-demand games. On the raw material side, glycerol faces pressure in selling high-priced cargoes, bearish sentiment is gradually rising, and prices are expected to decline, leading to diminishing cost support for ECH. On the demand side, influenced by the "buy on rise, avoid on fall" mentality, procurement by key downstream epoxy resin enterprises has become cautious, focusing primarily on rigid demand with insufficient willingness to proactively enter the market for restocking. Meanwhile, as the Mid-Autumn and National Day holidays approach, downstream factories are generally operating at low loads with limited pre-holiday stockpiling, resulting in a quiet trading atmosphere. On the supply side, ECH producers are managing oversold shipments and accelerating cargo turnover before the holiday to reduce inventory accumulation and warehousing risks during the break. Considering both cost and supply-demand factors, it is highly probable that the ECH market will continue to run weakly in the short term. Future attention should remain focused on unit operations and market trading dynamics.