June 30 News
In June, the Chinese epoxy resins market saw a significant one-sided decline, with overall weak performance and low trading volumes. The market price fell from 15,300 CNY/ton at the beginning of the month to 13,750 CNY/ton at the end of the month, a decrease of 10.13% within the month, leading to a continuous contraction in the profit margins of the industry chain. This sharp decline was due to a combination of factors, including a drop in raw material costs, oversupply, weak demand during the off-season, and a pessimistic market sentiment.
The cost support for raw materials has weakened. In June, upstream raw materials as a whole saw price reductions, completely easing the cost support. The listed price of the core raw material phenol was lowered, and the spot price followed suit; meanwhile, international oil prices declined, prompting a softening in the prices of supporting raw materials such as bisphenol A and epichlorohydrin. This significantly reduced the production costs of epoxy resins, creating room for market price cuts. As a result, the positive impact from the cost side has completely dissipated.
Supply is ample, and inventory pressure is high. The market supply side remains loose, with prominent issues of supply-demand imbalance. China's new epoxy resins production capacity continues to be released, coupled with the commissioning of new upstream raw material facilities and ample supply, the industry maintains high operating rates, and there is an abundance of spot goods. At the same time, the overall finished product inventory in the industry is seriously accumulated, leading to significant destocking pressure. Enterprises are actively lowering prices to increase sales volume, and low-priced goods continue to pull down the average market price.
Terminal demand is weak during the off-season. The core factor weighing down market conditions is weak downstream demand. June falls within the traditional off-season for the chemical industry, during which downstream sectors such as coatings, adhesives, and conventional composite materials are experiencing sluggish production activity, with only essential replenishment orders being placed. Meanwhile, mid-to-high-end downstream segments like electronic packaging and wind-power composites are facing insufficient orders and adopting a cautious approach to inventory buildup. As a result, there’s no concentrated demand for restocking across the market, leaving ample spot supplies unsold and causing prices to lose their demand support.
Market sentiment is weighing down prices and triggering a downward spiral. Continuous price cuts have completely reversed bullish market expectations, leaving the industry largely in a wait-and-see stance. Downstream traders and end-user companies are following the logic of "buying when prices rise, not when they fall," opting for just-in-time procurement and avoiding stockpiling. As a result, trading activity in the market has plummeted. The sluggish transaction volume is forcing companies to keep lowering prices and launching promotional offers, thus creating a negative feedback loop of "price cuts—wait-and-see—further price cuts," which further amplifies monthly price declines.
Looking at the short term, the market's negative factors have not dissipated, and it is likely to maintain a weak and volatile state. With no positive support for raw materials, large supply inventory pressure, and the continued effect of the off-season for downstream sectors, the market's wait-and-see sentiment will be difficult to quickly recover. The medium to long-term trend will depend on the pace of demand recovery and capacity reduction. If the downstream industries see a seasonal recovery and companies reduce their inventories, the market is expected to stabilize; if there are no positive signs of demand, the market will continue to fluctuate at low levels.
