Lead: Since August 6, China's domestic epichlorohydrin market has shifted from strength to weakness, with prices continuously declining. Dominated by the "buy on rising prices, not on falling prices" mentality, downstream buyers turned cautious, trading sentiment was subdued, and prices came under downward pressure. On August 17, the delivered price via acceptance bill in the Jiangsu market fell to 10,750 yuan/ton, a single-day drop of 500 yuan/ton and a week-on-week decline of 4.44%, fueling pessimistic sentiment. As prices gradually approached cost support levels for various production processes, profit margins narrowed markedly, and producers' willingness to hold prices strengthened. Meanwhile, downstream consumers and traders began restocking at lower levels, and market sentiment gradually recovered. On August 20, the Shandong market took the lead in raising prices, followed by upward adjustments in mainstream prices in Jiangsu, Huangshan, and other regions. Trading activity improved notably, the negotiation focus moved upward, and the market showed a V-shaped recovery pattern—falling first and then rising.
During the review period, China's epichlorohydrin market followed a trajectory of decline followed by recovery. The weekly average price in the Jiangsu market was 10,850 yuan/ton, down 5.2% week-on-week. At the beginning of the week, the market remained under continuous downward pressure, mainly due to insufficient downstream demand follow-through, poor sales at production enterprises, and a lack of confidence in the outlook, which together drove prices lower. However, as prices fell to relatively low levels and with profit margins further compressed and sentiment shifting, producers' willingness to support prices increased. Starting August 20, the market bottomed out and staged a rebound, with a clear improvement in trading activity.
I. Supply Steadily Climbs, Industry Competition Intensifies
During the period under review, supply in the domestic epichlorohydrin market rose modestly, with total supply increasing versus the previous week. This was primarily attributable to the restart of some previously idled units in Shandong and higher operating loads, which lifted the overall industry operating rate slightly. According to statistics from Chempricehub, the average capacity utilization rate of China's epichlorohydrin industry during this period reached 48.98%, up 0.12 percentage points from the previous week. Although the increase was limited, it marked a second consecutive week of mild recovery. In terms of output, total production for the period was approximately 28,600 tons, up 0.35% from a week earlier, maintaining a modest growth trend. By regional contribution, Shandong—one of the major production areas—provided the main support for the output increase through unit restarts and load increases. Overall, epichlorohydrin supply is currently on a slow recovery track, but in the absence of downstream demand support, overall supply appears ample, and competitive pressure in the market remains unabated.
II. Major Downstream Epoxy Resin Prices Fall, Capacity Utilization Remains Low
Recently, prices in the domestic epoxy resin market have continued to decline. The core raw material epichlorohydrin fell substantially, bisphenol A also moved weakly, and cost support quickly softened. With no effective pull from downstream end markets, market sentiment was dominated by caution. Under the dual pressure of costs and demand, the mainstream negotiated price for liquid general-purpose epoxy resin in East China fell below the key threshold of 14,000 yuan/ton. The industry as a whole has again slipped into a loss-making range, and corporate profit margins have been severely squeezed.
In terms of epoxy resin supply, no new units entered maintenance during this period. Units at Zhejiang Haobang, Shandong Tianmai, and Hebei Linyuan were restarted, while the Dongfang Feiyuan unit remained under maintenance, resulting in an overall increase in industry output. The weekly average capacity utilization rate of China's epoxy resin industry was 47.26%, up 0.73 percentage points from the previous period. The utilization rates for liquid and solid epoxy resin were 49.88% and 33.43%, respectively. Output reached 39,000 tons, an increase of 1.56% from the prior period.
Although the capacity utilization rate of the main downstream epoxy resin industry increased slightly week-on-week, it remains at a relatively low level, providing only limited demand support for epichlorohydrin. At present, most epoxy resin producers are mainly fulfilling contract orders. Activity in spot market inquiries is not high, new order release is slow, and the room for further growth in consumption is limited. According to Chempricehub estimates, total downstream consumption of epichlorohydrin during this period was 23,700 tons, a marginal increase of 0.42% from the previous week. With limited downstream absorption capacity, effective support to the raw material side is hard to achieve.
III. Cost-Supply-Demand Tug of War Squeezes Profits of Both Epichlorohydrin Production Routes
During this period, domestic epichlorohydrin prices first declined and then rebounded. Average production costs for different processes also moved down, but epichlorohydrin prices fell by more than costs, causing theoretical profit margins for both processes to narrow further. As of August 20, the average production cost for the propylene route was 9,105 yuan/ton, while the weekly average profit was 1,510 yuan/ton, down 1,295 yuan/ton from the previous period, a decrease of 46.17%. For the glycerin route, the average profit stood at -1,090 yuan/ton, down 445 yuan/ton from the previous period, a decline of 68.99%.
IV. Epichlorohydrin Market Expected to Be Relatively Strong Next Week, But Upside Limited by Supply-Demand Bull/Bear Factors
Cost side: The price of the main raw material glycerin is expected to adjust within a narrow range, providing relatively stable cost support for epichlorohydrin, with no obvious upward impetus for the time being.
Supply side: Next week, some units have plans to restart or increase operating loads, and the industry capacity utilization rate is expected to recover, with market supply trending higher. Meanwhile, some enterprises also have shipment plans, so market-circulating supply is expected to remain relatively ample, intensifying competitive pressure and capping upward price momentum.
Demand side: The major downstream epoxy resin segment may see passive price increases supported by stronger costs, but limited by a shortage of new orders from end users, the improvement in resin capacity utilization will be constrained, and the actual incremental consumption of epichlorohydrin is unlikely to improve significantly. In addition, most downstream enterprises have already completed phased restocking over the past week and are currently focused on digesting raw material inventories and executing contracts. Inquiries for new spot orders are cautious, and follow-through on firm orders is slowing.
In summary, cost-side fluctuations are expected to be limited next week, while supply increases and demand remains weak, leaving the market trend under pressure. However, considering that most producers are primarily delivering earlier orders, some regional price centers may see narrow upward attempts, but the upside is expected to be limited.
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