In July, the domestic epoxy propane market showed a trend of first suppressing, then rising, and then rebounding, but there were signs of high-level loosening at the end of the month. At the beginning of the month, the price of epichlorohydrin hovered around the low point of the year (reference price of 7800 yuan/ton on July 1st); Subsequently, influenced by multiple favorable factors, the market rose strongly from July 9th onwards; As of July 27th, the spot price of epichlorohydrin has risen to 10000 yuan/ton. But by the end of the month, there were signs of high-level loosening in the market. According to the monitoring system, as of July 28th, the benchmark price of epichlorohydrin was 9400.00 yuan/ton, an increase of 20.51% compared to the beginning of this month.
Raw material side: In the first half of the month, the price of raw material propylene rose at a high level. Against the backdrop of high prices of raw material propylene and energy, all process routes of epoxy propane have entered a loss zone. The cost inversion forces production enterprises to lose their profit margins, and raising prices to support the market has become an industry consensus. In the second half of the month, as the price of propylene fell, the cost support for epoxy propane weakened. However, at that time, the epoxy propane industry was undergoing large-scale factory maintenance, shutdown, or load reduction, and the tight supply pattern made the epoxy propane price show a certain resistance to decline. After a brief decline, it immediately rose and surged. According to the monitoring system, as of July 28th, the benchmark price of propylene was 7767.67 yuan/ton, an increase of 4.81% compared to the beginning of this month (7411.00 yuan/ton).
Supply side: In July, multiple sets of epoxy propane units in China were shut down or operated at reduced load. The daily production of the industry has been compressed to around 16000 tons, and the capacity utilization rate has dropped to 57.48%. The circulation of spot goods is tight, factories are controlling their export volume, and social inventory continues to decline to a low level.
On the demand side: In early July, there was a period of concentrated replenishment of epoxy propane downstream, but overall it still showed a slightly weak trend. From the perspective of the main downstream polyether polyols, July and August are the traditional off-season for demand, and downstream industries such as building insulation, soft furniture, and automotive interior have relatively average demand. The construction insulation industry is affected by the construction period and maintains a low season; Soft furniture is affected by the slowdown of the real estate completion cycle and high temperature weather, which hinders the foaming operation of sponge factories and weakens overall production; Some car companies in the automotive interior industry are experiencing high temperatures and holidays, resulting in reduced demand. In terms of other downstream aspects, the propylene glycol market has followed suit with multi-dimensional holding of essential needs, resulting in mediocre trading performance; The capacity utilization rate of unsaturated resin factories remains at a relatively low level of around 34%, showing an overall stable to weak trend. The overall downstream operating rate of epichlorohydrin is relatively low, while the operating rates of polyether and unsaturated resin are both at a low level.
Comprehensive forecast: Analysts believe that in the short term, geopolitics remains the biggest uncertain factor, and prices are prone to rise but difficult to fall under the pattern of cost support and tight supply. In the medium to long term, it is expected that 900000 tons/year of new facilities will be added or gradually put into operation in the second half of the year, and the market will return to the dominance of supply and demand fundamentals. The fluctuation range of prices is expected to narrow, and the overall situation may show a narrow range oscillation. More attention should be paid to the trend of propylene prices on the raw material side, the dynamics of plant start-up and shutdown, and the follow-up of downstream new orders.