Introduction: In March 2026, the domestic epichlorohydrin (ECH) market experienced an overall tightening of supply, primarily due to the shutdown of major production facilities in Fujian. National production for the month reached 115,600 tons, a decrease of 3,600 tons from the previous month, representing a month-on-month (MoM) decline of 3.02%, though it still showed a year-on-year (YoY) increase of 6.76%. The industry's capacity utilization rate dropped to 49.03%, down by 6.94 percentage points MoM, while showing a slight YoY increase of 0.55 percentage points.

Capacity Utilization by Production Process in March

A clear divergence was observed between the propylene-based and glycerol-based production processes. Currently, the propylene-based process faces significantly increased costs and shrinking profit margins, although profits remain relatively substantial. Consequently, its capacity utilization continued at a high level, maintaining a monthly average of around 99%. In contrast, despite further improvement in profitability for the glycerol-based process, shutdowns of units in regions such as Fujian, Zhejiang, and Hebei further depressed the industry's overall capacity utilization rate. The average utilization rate for the glycerol-based process remained below 50% in March, significantly dragging down the industry's average.

Analysis of Maintenance-Related Production Loss in March

Maintenance activities in March involved ECH units with a combined annual processing capacity of 770,000 tons. During this period, the price of the primary raw material, glycerol, rose to high levels, while ECH prices initially increased before declining. Although the theoretical profit margin for glycerol-based ECH showed significant recovery, it remained below the cost line. Coupled with the shutdown of some units, this led to sustained low industry capacity utilization. The monthly production loss due to maintenance increased compared to the previous month.

Domestic ECH maintenance-related production loss in March amounted to 55,700 tons, an increase of 14,200 tons MoM (up 34.22%) and an increase of 16,900 tons YoY (up 43.7%). This increase was primarily driven by unit shutdowns in regions including Fujian, Jiangsu-Zhejiang, Shandong, and Hebei.

Market Outlook

Looking ahead to the domestic ECH market trend in April, both industry capacity utilization and production are expected to show a MoM decline. On one hand, the shutdown maintenance units in Fujian are scheduled to restart in mid-April. On the other hand, under pressure from persistently high costs, losses in glycerol-based ECH production continue to widen, leading to low operating rates at some units. Additionally, a major plant in Jiangsu plans maintenance at the end of April. After balancing these opposing factors, market supply is anticipated to contract. Overall, it is projected that both the domestic ECH industry's capacity utilization rate and production volume in April will experience a slight decrease compared to March. The industry's average capacity utilization rate may stabilize around 50%, with production estimated at approximately 115,200 tons. Close attention should be paid to the operational schedules of ECH units and their upstream/downstream industries, as well as the dynamic changes in the supply-demand landscape.