This week, the epoxy chloropropane market continued its upward trend. As of September 11th, the benchmark price of epichlorohydrin was 11600 yuan/ton, an increase of 3.57% compared to the beginning of this month. The price center of gravity continues to shift upwards, but downstream resistance to high prices is heating up simultaneously, and the market presents a pattern of “pushing up and playing games”.
Price influencing factors:
Raw material end: cost support rigidity enhancement. In terms of propylene, the resonance between crude oil and propylene has driven up prices, providing strong cost support. The tense geopolitical situation has pushed up the prices of crude oil and propane, coupled with a reduction in external sales of some major PDH companies, and the cost side support for propylene continues to strengthen. In terms of glycerol, although there are signs of weakening in external prices, prices remain firm in the context of tight domestic supply. Under the situation of dual raw materials rising simultaneously, the cost support of epichlorohydrin is relatively rigid. As of September 11th, the benchmark price of propylene is 10034.33 yuan/ton, an increase of 11.77% compared to the beginning of this month (8977.67 yuan/ton).
Supply side: Construction has rebounded but the increase is limited. This week, the average weekly production capacity utilization rate of epichlorohydrin in China was 45.34%, a decrease of 0.55 percentage points from last week. The overall supply has decreased compared to last week. The industry’s operating rate is still at a low level, and there is no obvious pressure on the supply side, which forms a certain bottom support for prices.
Demand side: Urgent follow-up, cautious pursuit of high prices. The downstream epoxy resin market has been passively pushed up by raw material costs, but there is insufficient follow-up from the demand side, resulting in severe losses for factories, which mainly rely on executing previous orders. The operating rate of solid epoxy resin decreased by 2 percentage points to 40% compared to last week, and the operating rate of liquid epoxy resin also slightly fell to 50%. The downstream has limited acceptance of high priced raw materials, and the procurement maintains a rhythm of small order demand, resulting in a weak market trading atmosphere.
Market forecast: Analysts believe that there will be strong short-term fluctuations and focus on stocking pace. At present, there is still upward momentum on the cost side, and there is no significant pressure on the overall supply side. Coupled with the gradual release of downstream enterprise stocking demand before the National Day holiday, multiple favorable factors are resonating, and it is expected that the short-term epoxy chloropropane market will continue to maintain a strong operation. However, it should be noted that the profit loss of the glycerol process has expanded to 1043 yuan/ton, and the profit of the propylene process has also shrunk, highlighting the contradiction in profit distribution in the industrial chain. If downstream resistance to high priced raw materials further intensifies, the upward space for prices may be constrained. It is expected that the market will mainly experience strong fluctuations next week, with a focus on the actual release rhythm of National Day stocking.
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