【Introduction】 Since May, multiple bearish factors have jointly suppressed China's epichlorohydrin market, leading to a sustained price decline. This has significantly compressed theoretical profit margins across different production processes, with the industry's capacity utilization rate continuously falling. Downstream players hold a bearish outlook for the future, making cautious inquiries, and the overall market transaction atmosphere remains僵持 (deadlocked). On June 2, Shandong acceptance delivery prices consecutively declined, losing the 10,000 yuan/ton threshold. Meanwhile, as prices continued to fall to low levels, downstream inquiries for just-in-need procurement increased. Although this provided a positive boost to the epichlorohydrin market, such just-in-need demand is unsustainable, limiting the upside potential moving forward.

Supply: Continued Price Declines Sharply Compress Profit Margins, Capacity Utilization Falls

Table: Weekly Epichlorohydrin Production and Capacity Utilization Comparison in China

| Item | Previous Period (2026/05/22-05/28) | Current Period (2026/05/29-06/04) | Difference | MoM Change |
| --- | --- | --- | --- | --- |
| Production (10,000 tons) | 2.38 | 2.14 | -0.24 | -10.08% |
| Capacity Utilization Rate | 45.05% | 40.54% | -4.51% | -- |

Source: Chempricehub Info

From the supply side, since the post-May Day holiday return, epichlorohydrin prices have been declining continuously, with the decline accelerating. On May 29, the Shandong market price dropped by 500 yuan/ton to 10,400-10,500 yuan/ton on an acceptance delivery basis, a single-day decline of 4.57%. Due to the persistent price drop, industry profits have sharply decreased, with the glycerin-based process further expanding its losses, dampening production enthusiasm. Units such as Shandong Minji, Jiangsu Haixing, Hebei Zhuotai, Zhejiang Zhenyang, Befar Group, and Hebei Jinbang have successively suspended operations, while others have reduced operating rates. Overall, the industry's supply is showing a contraction trend. According to Chempricehub Info statistics, the average capacity utilization rate for the epichlorohydrin industry this week was 40.54%, down 4.51 percentage points from last week. From May 29 to June 4, domestic epichlorohydrin production was 21,400 tons, a month-on-month decrease of 10.08%. Looking ahead, Jiangsu Haixing's 130,000-ton/year propylene-based unit plans to restart, while a major Jiangsu producer's 150,000-ton/year glycerin-based unit plans to shut down. Offsetting these factors, total epichlorohydrin supply in the next period is expected to increase, with estimated production of 23,500 tons and a capacity utilization rate of 44.52%, a sequential increase of 3.98 percentage points. Barring additional volume reductions, the support to the market will be limited.

Demand: Lack of Downstream Orders, Procurement Pace Slows

Figure 1: Trend Chart of Weekly Average Capacity Utilization Rate for the Epoxy Resin Industry in 2026 (%)

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Source: Chempricehub Info

On the demand side, the epoxy resin industry is gradually entering the traditional consumption off-season. The persistent high temperatures continue to impact operations in downstream end-use sectors such as coatings, composite materials, and electronic potting compounds, resulting in persistently low capacity utilization rates across the industry. Downstream end-users face a shortage of finished product orders, forcing a passive reduction in production rates, which leads to a declining trend in raw material consumption. In this context, both downstream plants and intermediate traders are extremely cautious in their trading operations. The market procurement pace has generally slowed, with players largely abandoning bulk stocking operations and focusing on sporadic just-in-need replenishments. Combined with the fluctuating prices of upstream raw materials Bisphenol A and epichlorohydrin, market sentiment has become more观望 (wait-and-see), as participants await a clearer price trend. Transaction volumes are hindered, and the demand side shows no effective signs of recovery.

Cost and Profit: Profits Across Processes Contract, Glycerin Method Losses Widen

Figure 2: Cost-Profit Comparison Chart for Propylene-Based Epichlorohydrin (Unit: yuan/ton) | Figure 3: Cost-Profit Comparison Chart for Glycerin-Based Epichlorohydrin (Unit: yuan/ton)
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Source: Chempricehub Info | Source: Chempricehub Info

From a cost-profit perspective, during this period, prices of the core raw materials for propylene-based epichlorohydrin—propylene and liquid chlorine—adjusted within a narrow range, weakening cost support. Coupled with the drag from falling epichlorohydrin prices, the average profit for the propylene-based route in this period was 1,113 yuan/ton, a decrease of 998 yuan/ton from the previous period, down 47.28% month-on-month. Although profit margins have shrunk significantly, this process still maintains a robust profitability level. In contrast, for the glycerin-based production route, persistently weak costs combined with declining epichlorohydrin prices have led to a continuous expansion of industry losses. The average profit for the glycerin-based process in this period was -1,130 yuan/ton, a decrease of 65 yuan/ton from the previous period, or a drop of 6.1%. Looking ahead, prices of the main feedstock glycerin are expected to decline in June. The loss-making state for the main glycerin-based production route will be difficult to repair in the short term, potentially causing some disruption to the epichlorohydrin supply side.

Outlook: Limited Upside Space, Narrow Range Fluctuations Ahead

In the short term, as epichlorohydrin prices have fallen to low levels and profit margins across all production routes continue to tighten, there is a growing willingness in the market to stop the decline and push prices higher. Spot prices are expected to experience a staged, moderate rebound. However, the major downstream epoxy resin sector is burdened by high inventory pressure and is reducing operating rates, resulting in weak follow-through on raw material procurement. This creates a top-down demand constraint. Therefore, the upside potential for this price rally is likely limited, and after a short surge, the market may enter a phase of range-bound consolidation.

In the medium to long term, as the downstream epoxy resin industry gradually enters the traditional consumption off-season, weakening end-user demand will drive a synchronous decline in raw material requirements along the supply chain. The supply-demand balance for epichlorohydrin is expected to loosen, making it difficult for the market to show significant improvement. However, considering the cost floor support and persistent demand drag, epichlorohydrin is expected to continue its narrow-range fluctuating trend. Nonetheless, uncertainties such as feedstock volatility and unexpected unit outages remain, warranting further monitoring of subsequent developments.