Since the beginning of September, the domestic epichlorohydrin market has reversed its previous downward trend, with prices gradually recovering. As of September 9, the reference price in the Jiangsu market stood at around RMB 11,550/tonne on a delivered basis under acceptance bill terms, up RMB 400/tonne, or 3.59%, from the end of August.

The recent price rebound has been driven by a combination of stronger cost support, tighter spot availability, and improving downstream demand. In the short term, rising raw material costs, limited supply-side pressure, and the gradual release of pre-holiday stocking demand ahead of the Mid-Autumn Festival and National Day holidays are providing a favorable environment for the market. As a result, epichlorohydrin prices are expected to remain relatively firm in the near term.

Supply Tightness Provides Initial Support

The recent strengthening of the epichlorohydrin market has been closely linked to tighter spot supply and higher production costs.

On the supply side, some epichlorohydrin units in Shandong have either shut down or reduced operating rates, while most producers are prioritizing existing orders. This has reduced the availability of spot cargoes and strengthened bullish sentiment among producers and traders.

The tighter epichlorohydrin supply has also supported prices for glycerin, an important raw material for the glycerin-based production process. Rising glycerin prices have pushed up production costs, providing additional cost support for epichlorohydrin.

On the demand side, unexpected production disruptions in Shandong have affected the delivery of some contracted volumes, prompting traders to actively seek replacement cargoes. At the same time, downstream buyers have become more willing to replenish inventories at relatively lower price levels, helping to improve overall market activity.

With supply tightening, costs increasing, and demand gradually recovering, low-priced offers have become less common and transaction prices have continued to move higher.

I. Unit Restarts and Higher Operating Rates May Increase Supply

Although supply is currently relatively tight, domestic epichlorohydrin output is expected to increase in the near term as several production units resume operations or raise their operating rates.

Binzhou Chemical Group has resumed production and increased its operating load, while Shandong Minji and Hubei Minteng are also expected to restart. In addition, some other units in Shandong have increased their operating rates, although most remaining plants are operating relatively steadily.

According to Longzhong Information, the average capacity utilization rate of the domestic epichlorohydrin industry reached 46.2% during the latest period, an increase of 0.31 percentage points week-on-week. Production was approximately 27,000 tonnes, up 0.75% from the previous week.

Looking ahead, improving margins for the glycerin-based production process may encourage some producers to increase operating rates further. Therefore, the pace of supply recovery will be an important factor to watch.

II. Downstream Demand Is Improving, but High Prices Face Resistance

The traditional “Golden September and Silver October” peak season is providing some support to downstream demand.

As the main downstream product, epoxy resin is expected to see higher production during the peak season, with industry capacity utilization potentially rising to around 47%. This should provide additional support for epichlorohydrin consumption.

Some downstream manufacturers and traders conducted limited restocking in late August and early September, while further procurement demand remains to be released. In addition, expectations for pre-holiday inventory replenishment ahead of the Mid-Autumn Festival and National Day holidays are gradually strengthening.

This has reduced producers’ willingness to offer at low prices and helped establish a firmer price floor.

However, the situation is not entirely bullish. Prices of both major epoxy resin raw materials have already recovered to relatively high levels, increasing cost pressure on downstream producers. If epichlorohydrin prices continue to rise rapidly, buyers may become more cautious, limiting the growth of actual demand.

III. Glycerin Provides Cost Support, but Upside Remains Limited

Glycerin prices are expected to remain slightly firm in the short term, although the potential for further increases may be limited.

Crude glycerin feedstock prices remain relatively strong, providing continued support for glycerin production costs. Meanwhile, most domestic glycerin plants are operating normally, and imported cargoes are arriving as scheduled. Overall supply therefore remains stable.

Demand, rather than supply, is currently the main factor limiting price increases.

Although the recent rise in epichlorohydrin prices has improved the profitability of the glycerin-based production process, margins remain close to the breakeven level. As a result, producers have shown limited willingness to significantly increase operating rates, while glycerin procurement remains largely focused on essential demand.

Therefore, the glycerin market may continue to move slightly higher in the short term, but a sustained rally appears unlikely unless downstream demand strengthens significantly.

Short-Term Outlook

Overall, the epichlorohydrin market is currently supported by several favorable factors.

First, supply is expected to recover as some production units restart or increase operating rates, but the additional volume is likely to be limited in the short term.

Second, downstream demand is receiving seasonal support as buyers gradually prepare for the Mid-Autumn Festival and National Day holidays.

Third, relatively firm glycerin prices continue to provide cost support for glycerin-based epichlorohydrin production.

These factors suggest that epichlorohydrin prices are likely to remain firm and may continue trending upward in the short term. However, high downstream costs and resistance to expensive cargoes could limit the pace of further increases.

From a medium- to long-term perspective, the market will ultimately depend on the balance between supply recovery and downstream demand. For September, the average epichlorohydrin price is expected to remain on an upward trajectory, although the pace of the increase may gradually moderate.