Downstream demand was moderate, and the allyl chloride market edged down within a narrow range.

This week, domestic allyl chloride spot prices edged down. Although upstream propylene feedstock was somewhat strong, providing support to production costs, the market was under multiple pressures from increased supply-side availability, limited downstream follow-through, and hindered profit transmission along the industrial chain. As of August 20, the average mainstream price of allyl chloride in Shandong was 7,300 yuan/ton, down 0.68% from the same period last week. In the short term, temporary shutdowns at some local units will reduce supply, which may provide a brief boost to the market, but without substantial demand-side improvement, the sustainability of any price increase remains uncertain.

This round of price adjustment was mainly driven by supply-demand fundamentals:

I. Supply side: steady plant operations, relatively ample market supply

During this period, domestic major allyl chloride production units ran stably overall, with industry operating rates at a medium-to-high level. Meanwhile, a supporting unit at Baling Petrochemical experienced operational fluctuations, leading to increased external sales and further impacting the market.

II. Demand side: weak downstream follow-through, mainly rigid-demand procurement

1. Poor transmission along the epichlorohydrin chain: Downstream epoxy resin producers in the epichlorohydrin chain are constrained by end-user demand, resulting in limited order growth and compressed profit margins. Plants generally maintain just-in-time operating rates and purchase allyl chloride feedstock on an as-needed basis, with no active inventory building.

2. Pesticide and pharmaceutical intermediate demand is tepid: In the seasonal demand off-season, the pesticide industry has slowed its restocking pace, and pharmaceutical intermediate orders show no significant growth. Small and medium-sized downstream plants purchase on demand, large orders are scarce, and the market lacks incremental demand drivers.

III. Outlook: stable in the short term, with upward expectations later

In the near term, holders are mainly fulfilling existing orders, and the market will remain stable. In the coming cycle, some local supply units are taking downtime, temporarily reducing supply and potentially providing some support to the market. Attention should be paid to demand improvements in the downstream epichlorohydrin and intermediate sectors.

Top 5 operating capacities of representative allyl chloride producers: