October 10th report:
After the holiday, the Chinese epichlorohydrin market showed a strong upward trend. According to the monitoring system, as of October 10, the benchmark price of epichlorohydrin was 11,300 CNY per ton, an increase of 4.63% compared to the beginning of the month.
Raw Material Side: Propylene prices have surged strongly, with robust cost support. This week, propylene prices in Shandong continued to climb to around RMB 9,977 per ton, up 2.78% from the previous week, while liquid chlorine also rose in tandem to RMB 250 per ton, providing solid cost‑driven support for propylene oxide. According to the monitoring system, as of October 9, the benchmark price of propylene stood at RMB 9,977.67 per ton, a 2.78% increase compared with the beginning of the month (RMB 9,707.67 per ton).
Supply side: Production is stable with a slight increase, and maintenance expectations in mid-month may cause some disruption. Units at Zhenhai Phase 2, China Fine Chemical, and Guoen are currently shut down, but overall supply remains stable. Some units are expected to undergo maintenance in late October, while there is a possibility of Shenghong Petrochemical's unit resuming production. New capacities from Guoen Chemical and North Huajin are planned to start up in October, leading to a balance between the increase in supply and the reduction due to maintenance.
Demand side: Primarily driven by essential‑use orders, with a continued pattern of divergence. In the polyether segment, the successful launch of Yinuowei’s 300,000‑ton‑per‑year expansion project is adding to demand; however, scheduled maintenance at Wudi Xinyue and Binhua’s Phase I will offset some of this increase, resulting in mixed supply‑and‑demand dynamics. In the propylene glycol segment, Shandong Weiers’ plant is slated for a shutdown for maintenance, and downstream chemical demand is expected to ease in October. Downstream buyers are increasingly reluctant to absorb higher raw‑material prices, with new orders largely confined to small, essential‑use volumes and limited appetite for price premiums.
Overall forecast: In the short term, with propylene trading at elevated levels and little inventory pressure on the supply side, propylene oxide prices still have some room to rise. However, in the medium term, as maintenance‑scheduled units come back online and new capacity gradually enters the market, supply-side pressures are expected to mount. Meanwhile, the peak demand season is proving less robust than anticipated, and downstream buyers are growing increasingly reluctant to accept higher prices, limiting further upside. We expect October prices in the Shandong region to fluctuate within the 9,500–11,300 CNY/ton range. Additional attention should be paid to the pace of restarts and capacity ramp-up, as well as shifts in downstream stocking behavior.
