I. Summary of the Unsaturated Polyester Resin (UPR) Market in Q1 2026

(A) Price Trend: Strong Upward Movement, Reaching a New High for the Period

Analysis of the domestic UPR market in Q1 2026 shows a significant rebound from the bottom, marking a strong recovery that ended the recent downtrend and led to a notable upward shift in the price center. By the end of March, mainstream transaction prices in East China had climbed to RMB 10,500-10,600/ton, a cumulative increase of RMB 3,100-3,200/ton, or 41.33%-42.11%, compared to the end of December 2025. In January, driven by concentrated pre-holiday restocking by downstream users and rising upstream raw material costs, market prices rose steadily, albeit at a relatively moderate pace. By month-end, domestic material offers reached RMB 7,800-7,900/ton. In February, post-holiday downstream resumption of operations was slower, with demand primarily focused on essential restocking, leading prices into a consolidation phase. Prices remained largely flat compared to the end of January, with a strong wait-and-see sentiment prevailing in the market. In March, a sharp surge in international crude oil and raw material prices provided strong cost-side support, propelling resin prices rapidly higher. Subsequently, market sentiment became more rational, with supply-demand dynamics taking the lead in guiding price direction. Coupled with the release of downstream restocking demand, prices surged by 49.30% within the month, reaching the highest level since 2023.

The core driver for the substantial price increase in Q1 was the comprehensive rise in costs. Domestic UPR producers jointly raised their offers, and traders held back stocks, collectively reinforcing market expectations of "tight spot supply" in the early stages of the price hike. Concurrently, macro-level disruptions such as geopolitical conflicts further exacerbated supply-demand imbalances. Multiple positive factors resonated, rapidly pushing UPR prices higher, significantly boosting market trading activity, and providing strong support for the industry's fundamentals in the short term. Data shows that by the end of March, the ex-factory prices of mainstream domestic UPR manufacturers had been cumulatively raised by RMB 2,500-3,000/ton for the quarter, representing a year-on-year increase of 25.38%-30.00%.

On the cost side, China's styrene market saw price increases in March. Geopolitical conflicts during the month restricted crude oil shipments from several Gulf countries, leading to a sharp rise in crude oil prices and subsequently a widespread increase in petrochemicals, providing strong support for styrene production costs. The styrene market itself experienced a tug-of-war between supply and demand during the month, characterized by reluctance to sell at low prices, restocking after price dips, and profit-taking after significant gains. Downstream demand showed strong rigidity but weak spot procurement. However, positive impacts from domestic styrene exports and limited port inventory accumulation meant terminals faced no significant pressure, fostering a bullish sentiment throughout the month. China's styrene market fluctuated upward in March. Overall, products across the industrial chain showed a broad upward trend, with phthalic anhydride (excluding maleic anhydride) posting the largest increase, up 34.24% month-on-month. This directly pushed up UPR production costs, providing solid support for the price increase.

(B) Costs and Profits: Raw Material Prices Rose Significantly, UPR Industry Profits Declined

Cost Side: During January-February, the price of styrene, a core raw material for UPR, mainly fluctuated at low levels, showing a generally mild upward trend, gradually rising from around RMB 6,915/ton to above RMB 7,675/ton. Entering March, driven by a surge in international crude oil prices, styrene prices rose rapidly. Although they experienced a slight subsequent correction, they remained at high levels, with the monthly average price reaching RMB 10,950/ton, a significant increase of 42.67% month-on-month. This sharp fluctuation on the cost side led to a significant rise in production costs across the UPR industrial chain, further highlighting the cost transmission effect.

Profit Performance: Although the UPR market raised prices in sync during Q1, the price increases failed to cover the rise in raw material costs, leading to a noticeable narrowing of industry profit margins. Data shows that the average profit for the quarter was only RMB 264/ton, marking the lowest profit level since Q2 2023. This reflects that the transmission of cost pressure to terminal profits has substantially compressed corporate profitability.

II. Outlook for the Unsaturated Polyester Resin Market in Q2 2026

Analysis of the UPR price trend for Q2 suggests prices will maintain a pattern of high-level fluctuations, with a potential technical adjustment by the quarter's end. The main price drivers will be the dual forces of "rigid cost transmission" and "supply-side constraints," pushing the industry's price center upward in a stepwise manner. The specific phased characteristics are as follows:

• April - Unilateral Rise Phase: Persistently high raw material prices will create strong cost transmission. Stable domestic rigid demand, coupled with better-than-expected export order volumes, will lead to a positive feedback loop of "tight supply - rising prices." Mainstream transaction prices are expected to reach new cyclical highs.
• May - High-Level Fluctuation Phase: The supply contraction effect from concentrated plant maintenance will continue. However, downstream acceptance of high-priced raw materials will marginally decrease, leading to a cooling of market trading activity. Against the backdrop of persistently low industry inventory, producers will maintain a strong pricing strategy, resulting in a weak equilibrium state of "high prices - low transaction volume."
• June - Supply-Demand Rebalancing Phase: The gradual release of maintenance capacity will restore supply elasticity. Coupled with the terminal sector entering the traditional off-season, procurement demand will slow. Under the constraint of zero new industry capacity, the room for price correction will be limited. The quarterly average price will still maintain a significant premium over Q1 levels.

Potential downside risks include: Geopolitical easing could lead to a contraction in the crude oil-styrene industrial chain premium, weakening cost-side support. If price increases in April-May are too rapid, it could trigger passive production cuts by downstream processors, accelerating the seasonal correction process.

UPR Market Visit in Jiangsu, April 27-30