In 2007, the epichlorohydrin market experienced a mix of optimism and uncertainty. Although domestic demand was slightly weaker compared to 2006, it still exceeded industry expectations. The market reached a peak price close to 20,000 yuan per ton, showing strong momentum during the year. However, as we moved into 2008, the outlook became more challenging, with significant volatility and uncertainty remaining in the market.
Throughout 2007, the domestic epichlorohydrin market went through several distinct phases. In January, prices began to decline, starting above 19,000 yuan and dropping to around 17,000 by month-end—a drop of 2,000 yuan. Market activity was sluggish. February saw continued downward pressure due to the Spring Festival holiday, with prices falling further to approximately 16,000 yuan. By early March, the market hit a low point below 15,000 yuan, but then rebounded slightly, reaching 16,000 yuan by the end of the month. Prices gradually rose in April, peaking at around 17,000 yuan in July. Then, in September, the market surged again, with prices rising sharply and surpassing 19,000 yuan by October—nearly hitting the 20,000 yuan mark. This surge surprised many in the industry. However, by December, prices had retreated back to around 16,000 yuan.
Looking ahead to 2008, the market remained uncertain. Domestic production capacity increased significantly, with output expected to reach about 600,000 tons—an 28% rise from 2007. This growth in supply could lead to a shift in the supply-demand balance. Meanwhile, downstream demand for epichlorohydrin, particularly in epoxy resin production, continued to grow. In 2007, apparent consumption reached nearly 400,000 tons, up 53.8% from 2006. Epoxy resins, which are heavily dependent on epichlorohydrin, have seen rapid development in China, driven by applications in coatings, composites, electronics, and adhesives.
Import volumes dropped significantly in 2007, with total imports reaching 70,000 tons—a 47.3% decrease from the previous year. On the other hand, exports surged to 650,000 tons, reflecting improved domestic conditions. However, the removal of export tax rebates in 2007 negatively impacted export activity, especially in the latter half of the year.
The high profitability of the epichlorohydrin industry attracted numerous new entrants, leading to overcapacity and potential market disorder. As more producers entered the market, competition intensified, and prices could face downward pressure. This trend may lead to a reshuffling of the industry, similar to what has occurred in other chemical sectors. Overall, while 2007 brought some positive developments, 2008 posed greater challenges, with the market likely to remain volatile and unpredictable.
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