In 2007, the epichlorohydrin market showed a mixed but overall positive trend despite some fluctuations. While the domestic market performed slightly worse than in 2006, it still exceeded industry expectations. The peak price of the year approached 20,000 yuan per ton, which was a significant milestone for the sector. However, by 2008, the market remained uncertain, with many variables influencing prices and demand.
Throughout 2007, the market went through several distinct phases. In January, prices started to decline from over 19,000 yuan to around 17,000 yuan by the end of the month. February saw continued downward pressure, especially due to the Spring Festival holiday, with prices dropping further to about 16,000 yuan. March marked a turning point as prices fell below 15,000 yuan, reaching the annual low. By mid-March, the market began to recover slightly, pushing prices back up to 16,000 yuan by month’s end.
April brought a modest increase, with prices rising to 16,500 yuan by July, and then climbing to 17,000 yuan by September. October saw a sharp upward movement, with prices surpassing 19,000 yuan and nearing the 20,000 yuan mark—setting a new high for the year. This surge surprised many in the industry. However, the price stabilization didn’t last long. By the end of December, the market reversed again, with prices falling back to around 16,000 yuan.
Looking ahead into 2008, the outlook wasn't as promising. The domestic supply of epichlorohydrin continued to grow rapidly. In 2006, production capacity stood at approximately 264,000 tons, with output around 102,000 tons. By 2007, capacity had jumped to 469,000 tons—a 77.7% increase. For 2008, it was projected to reach 600,000 tons, a 28% rise. This surge in supply would likely create a mismatch between supply and demand, putting pressure on prices.
On the demand side, the growth of downstream industries such as epoxy resin and synthetic glycerin drove consumption. In 2006, apparent consumption was around 260,000 tons, rising to nearly 400,000 tons in 2007—a 53.8% increase. Epoxy resin, in particular, was the largest consumer, used in coatings, composites, electronics, and adhesives. China's rapid development in this sector led to increased demand for epichlorohydrin, contributing to price hikes.
Trade dynamics also played a key role. From January to November 2007, imports dropped significantly by 47.3% year-on-year to 70,000 tons, while exports surged to 650,000 tons. This shift was partly due to the cancellation of export tax rebates in 2007, which impacted the export market negatively in the latter half of the year.
With strong profit margins, the epichlorohydrin industry attracted significant investment. However, the influx of new players and expanded production capacity risked disrupting market stability. Overcapacity, intensified competition, and declining efficiency could lead to a repeat of past cycles, where prices fell and the industry underwent a restructuring phase.
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