Introduction: In the first half of 2026, China's C5 petroleum resin market experienced a complete and violent fluctuation cycle of "stability → rebound → surge → high-level loosening → rapid decline → continuous bottoming out," ultimately seeking a temporary bottom in a pattern of weak supply and demand.
I. C5 Petroleum Resin Spot Prices and Spot-Futures Spread Trends
Road Marking Paint Grade C5 Petroleum Resin: From Emotion-Driven Demand Surge Back to Off-Season Reality
In January-February, C5 petroleum resin prices rose moderately from the 7,500-8,600 yuan/ton range to 7,800-8,900 yuan/ton. The core driver was the sustained high price of hydrogenated petroleum resin, which created substitution space and stimulated pre-holiday and post-holiday stocking demand. In March-April, the escalation of the US-Iran conflict in March caused the prices of raw materials cracked C5 and dicyclopentadiene to soar. The combination of cost pressures and emotional stockpiling led to a surge of over 2,000 yuan/ton in March alone, pushing prices to the 9,800-16,000 yuan/ton range. Entering April, receiving prices in East China hit their yearly peak of 13,000-13,600 yuan/ton. However, downstream hot melt coating customers, unable to pass on such high costs, proactively reduced purchases. Additionally, as US-Iran peace talks began, a bearish sentiment emerged downstream, causing a sharp decline in order volumes in late April. Short-term arbitrage windows between Shandong and East China occasionally opened as prices fluctuated widely, leading to active southbound arbitrage trade for C5 petroleum resin. In May-June, with the easing of the Middle East situation, a 60-day ceasefire agreement reached, the reopening of the Strait of Hormuz, and falling international oil prices, the cost support from raw materials collapsed. In May, downstream customers primarily destocked their high-priced inventories, causing prices to plummet by 1,200 yuan/ton in a single month. In June, raw material prices continued to fall, approaching pre-conflict levels. During the construction off-season, oversupply emerged, and prices fell to the 8,500-12,000 yuan/ton range, even briefly hitting weekly lows of 8,000-9,000 yuan/ton at month-end.
Adhesive Grade C5 Petroleum Resin: The Dual Narrative of Substitution Logic and Cost Collapse
In January-February, C5 petroleum resin prices consolidated and edged slightly higher within the 8,300-11,500 yuan/ton range. As hydrogenated petroleum resin prices surged significantly, creating a price gap of up to 2,000 yuan/ton, downstream label adhesive and adhesive industries switched to C5 resin. Manufacturer orders actually grew during the off-season, overall shipments were smooth, and inventory levels generally decreased. Furthermore, following last year's sustained decline, Anhui Tongxin plant faced capital chain constraints, announced a shutdown, and had no immediate restart plans. Annual supply saw a notable reduction. Additionally, routine maintenance at Zhejiang Derong, Fujian Luhua, and Wuhan Luhua further tightened the supply situation. Overall market expectations were positive.
In March-April, the outbreak of the US-Iran war on the last day of February caused a sharp rise in dicyclopentadiene prices, leading to severe losses for producers. This resulted in delayed deliveries of many low-priced orders and some contract defaults. In an emotionally driven market, downstream adhesive factories placed large orders, and adhesive-grade resin prices surged by over 4,000 yuan/ton between March and April. The East China and Jiangsu markets hit historic highs of 16,000-16,500 yuan/ton in mid-April, with average prices reaching nearly 15,700 yuan/ton. However, as downstream customers became wary of high prices and competition from rosin resin intensified, trading volume at high price levels diminished.
In May-June, with the easing of the Middle East situation, a 60-day ceasefire agreement reached, the reopening of the Strait of Hormuz, and falling international oil prices, costs dropped precipitously in the second quarter. Some dicyclopentadiene prices fell by over 5,000-11,000 yuan/ton to 6,900-7,500 yuan/ton. Additionally, entering the label adhesive off-season in June, downstream demand contracted significantly. Prices continued to fall back to pre-war levels, driving continuous price declines. By the end of June, high-end prices in the Jiangsu and East China markets gradually fell to around 11,000 yuan/ton, while low-end transaction prices approached 10,000 yuan/ton. Producer operating rates also dropped significantly to match the weak demand.
II. C5 Petroleum Resin Supply Changes in H1
Due to the continuous decline in C5 petroleum resin prices in 2025, the Fushun Huaxing and Anhui Tongxin plants remained idle in the first half of the year, resulting in a reduction in fixed monthly volumes. From January to March, the expectation of a rebound and subsequent price increase supported a high operating rate near 70%, with production volumes of 39,000 tons, 36,000 tons, and 40,000 tons, respectively. In April, producers including Puyang Xinyu, Puyang Ruisen, Henan Zhongtai, and Henghe Materials faced sharply increased cost pressures due to soaring prices of raw materials cracked C5 and dicyclopentadiene, alongside routine maintenance. Moreover, with prices rising to 13,000-16,000 yuan/ton, downstream customers' tolerance for high prices weakened, and risk aversion increased, leading to a significant drop in supply. Production fell to 33,000 tons, and the operating rate dropped to below 60%. As the inflated raw material prices subsided in May-June, production began to recover. However, the downstream market entered its off-season, and customers needed to digest inventories accumulated from overbuying in March-April, which dampened producer enthusiasm. Production recovered to 35,000 tons in May (operating rate ~60%) before declining to 32,000 tons in June, keeping the operating rate below 60%.
III. C5 Petroleum Resin Consumption Changes in H1
In the first half of the year, downstream profits were strong initially but weakened later. Entering March, prices of cracked C5 and dicyclopentadiene surged, rising by 1,000-2,000 yuan/ton over a single weekend. Although the market was in an upward cycle, producers experienced periodic losses. The H1 average profit was 648 yuan/ton, down 54.65% year-on-year and 25.43% quarter-on-quarter, representing a significant decline compared to the previous year. By the end of June, domestic cracked C5 and dicyclopentadiene prices remained 500 yuan/ton and 1,700 yuan/ton above recent lows, respectively, while C5 petroleum resin prices had fallen back to last year's low levels. Consequently, the industry entered a loss-making phase. A large number of plants underwent maintenance, resulting in what might be the lowest operating rate in recent years. There was almost no room for resin price concessions, and prices began to bottom out in July.
In the first quarter, rising C5 petroleum resin prices supported optimistic domestic consumption: consumption volume was 35,000 tons in January, but halved to around 18,000 tons in February due to the Spring Festival holiday. In March, robust foreign demand led to supply constraints domestically, resulting in consumption of 30,000 tons. In the second quarter, excessively high C5 petroleum resin prices in April caused a pullback in downstream procurement, limiting purchases to essential needs and leading to a clear decline in demand. As C5 petroleum resin prices continued to loosen and fall in May-June, downstream customers gradually replenished, and consumption recovered to 15,000-18,000 tons.
Therefore, domestic consumption by downstream hot melt coating and hot melt adhesive sectors was roughly flat year-on-year in Q1, but the demand reduction became prominent in Q2, causing C5 petroleum resin prices to fall excessively and profitability to weaken.
IV. C5 Petroleum Resin H2 Supply-Demand Balance and Price Forecast
From an inventory perspective, the sharp decline in downstream hot melt coating demand and the reliance on destocking by hot melt adhesive customers led to a sharp contraction in downstream demand. Producer inventories rose to their highest levels in recent years. Although demand is expected to recover in July, supply is also being significantly curtailed. The market supply-demand balance will remain positive, indicating continued oversupply.
Based on supply-demand data, with falling crude oil prices and the resumption of Strait traffic, August may be the only month in H2 with a negative supply-demand gap for C5 petroleum resin. In September, the C5 petroleum resin market will enter the peak consumption season. With a relatively concentrated supply of upstream ethylene, overall operating rates will rise significantly. As ethylene plants typically operate normally in Q4, C5 petroleum resin production will be supported. However, the downstream market will enter its off-season. Therefore, the market will face overall oversupply, driving prices downward.
Consequently, C5 petroleum resin prices are expected to enter an upward cycle in August. However, fluctuations in the Middle East situation may cause end-user consumption to fall short of expectations. Thus, prices are likely to enter a downward cycle in October and will continue to weaken through the fourth quarter.
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