Lead-in: Following the National Day holiday, the domestic epichlorohydrin (ECH) market exhibited a pattern of fluctuating rebound under the dual tug-of-war between cost pressures and supply-demand dynamics. On the first day back, producers held bearish expectations for the future market, compounded by some manufacturers' need to clear inventory, leading to increased bidding pressure and a downward shift in negotiation centers. Subsequently, as downstream users released their willingness to restock at lower prices, combined with a significant rise in propylene feedstock prices, market trading activity visibly warmed up. Sentiment for price increases strengthened, prompting enterprises to continuously raise ex-factory prices. As of October 15, the delivered price in the Jiangsu market rose to RMB 11,200–11,300/ton, an increase of 0.9% compared to the end of September. However, as prices continued to climb, resistance from downstream buyers emerged, limiting transactions for high-priced goods. Nevertheless, cost-side support remains, suggesting that short-term price fluctuations will be limited.
This period saw a rebound in ECH prices. On the cost side, glycerin adjusted weakly but retained supportive elements, while propylene staged a strong rebound due to tightening supply and external market news. The Shandong market price broke through RMB 10,000, causing a significant rise in costs for the propylene route and sharply compressing profit margins. On the supply side, following phased restocking by downstream clients last week, enterprise order books remained decent, with weekly activities focused on fulfilling prior orders. Some units in Shandong and Jiangsu reduced loads or shut down, resulting in a month-on-month decrease in industry supply and no immediate spot pressure. High costs coupled with tight supply heightened enterprises' determination to maintain prices, leading to continuous upward adjustments in ex-factory prices. On the demand side, downstream users engaged in phased restocking during the first week after the holiday, but became cautious about high prices after the rebound, with only some small-volume purchases made at lower levels. Low-priced goods were scarce, and overall trading activity was moderate. As of October 15, the average weekly price in the Jiangsu market was RMB 11,158/ton, an increase of RMB 108/ton from the previous week, representing a month-on-month growth of 0.98%.
During this period, the overall domestic supply of ECH decreased month-on-month compared to the previous week. This was primarily driven by shutdowns and load reductions at certain units in regions such as Jiangsu and Shandong. According to data from Chempricehub, the average capacity utilization rate of the domestic ECH industry this week was 44.51%, a decline of 2.58 percentage points from the previous week. In terms of production, output during the week of October 9–15 was 26,000 tons, a decrease of 5.45% from the preceding week.
This period, the domestic epoxy resin market presented a landscape of rising costs and pressured demand. The upward movement in ECH raw material prices pushed up production costs for epoxy resins, giving producers the intent to maintain prices and adjust quotations in line with raw material trends. However, overall downstream demand remained weak, with procurement mainly consisting of essential small orders. There was strong resistance to purchasing at high prices. Weak demand suppressed the extent of price increases; the center of market negotiations shifted slightly upward, but transaction follow-through was insufficient, resulting in a lackluster trend after the initial rise.
Regarding epoxy resin supply, there were no new maintenance shutdowns or restarts during this period. However, units that had paused or reduced loads during the National Day holiday resumed normal operating cycles this week. Combined with the ramp-up of newly commissioned capacity at Hunan Petrochemical, total epoxy resin output increased. The weekly average capacity utilization rate for the domestic epoxy resin industry was 51.07%, an improvement of 7.41 percentage points from the previous period; production reached 44,100 tons, an increase of 16.98% from the previous period.
Although the capacity utilization rate of the key downstream epoxy resin sector improved slightly month-on-month this period, it remains at a relatively low level overall, providing limited pull on ECH demand. Estimates from Chempricehub indicate that total consumption of ECH by the epoxy resin sector this period was 23,500 tons, a marginal increase of 0.43% from the previous week. While the incremental absorption capacity of downstream users is limited, it still provides stable support to the raw material side.
This period, domestic ECH prices showed a rebound trend, but average costs across different production routes remained high. The primary raw material, glycerin, experienced a weak downward price trend due to high costs and limited domestic demand. Although costs for the glycerin route softened, they still offered some support to ECH prices. With costs weakening and ECH prices rebounding within a narrow range, theoretical profits for the glycerin route saw a slight recovery. As of October 15, the average profit for glycerin-route ECH increased to -RMB 783/ton, a rise of RMB 117/ton from the previous period, representing a 13% improvement. From the perspective of the other production process, propylene prices staged a strong rebound influenced by bullish futures and tight self-supply. Since returning from the holiday, the Shandong market price broke through the RMB 10,000 threshold, rising to RMB 10,700/ton by October 15. This caused costs for the propylene route to rapidly surge to a high level of RMB 10,500–10,600/ton, drastically shrinking profitability. As of October 15, the average production cost for propylene-route ECH was RMB 10,367/ton, with an average weekly profit of RMB 487/ton, a decrease of RMB 387/ton from the previous period, representing a month-on-month drop of 44.28%.
On the cost side, the price of the primary raw material glycerin is expected to remain stable but weak, with limited fluctuations in glycerin-route costs maintaining a weak balance. Expectations exist for a pullback in propylene prices. Although there is still some support from the cost side, the fundamental supply-demand situation remains weak, and market trading continues to be sluggish. To avoid inventory accumulation risks, producers may offer phased discounts to clear stock.
On the supply side, a planned shutdown of approximately one month for a 150,000-ton/year unit in the Jiangsu region is scheduled. Meanwhile, some units in Shandong are expected to increase loads. After offsetting these factors, the supply outlook is expected to decrease, though attention should be paid to ongoing unit dynamics.
On the demand side, downstream epoxy resin companies have already completed their phased restocking in the earlier part of the cycle. Current procurement sentiment is cautious, focusing on consuming existing inventory rather than actively replenishing. Willingness for proactive restocking is weak, with limited real-order follow-through. Transactions are dominated by essential demand, lacking sufficient momentum to drive up raw material prices.
In summary, with a stalemate between bullish and bearish forces, supply support and weak demand form an offsetting effect. Short-term directional guidance is lacking. It is predicted that the ECH market will maintain range-bound oscillation next week. Key focus should be placed on equipment maintenance schedules and changes in downstream essential procurement.
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