October 31, 2024 – China’s Epoxy Resin Market Continues to Struggle with Low Prices and Oversupply
In September, the average price of liquid epoxy resin in China’s market was 12,878 yuan/ton, marking a 0.37% decrease from the previous month and a significant 13.25% drop compared to the same period last year. Throughout 2024, the epoxy resin market in China has remained sluggish, with prices hovering at low levels. This persistent trend is primarily attributed to the declining prices of upstream raw materials, bisphenol A, and epichlorohydrin, which have significantly weakened the cost support for epoxy resin.
Moreover, the continuous expansion of epoxy resin production capacity is another key factor contributing to the price decline. As new capacities are released, market competition intensifies, while downstream demand fails to keep pace with the supply, pushing epoxy resin prices even lower. According to AsiaMB, by the end of September, the gross profit margin for liquid resin had slipped to -272 yuan/ton, and the average gross profit margin for solid epoxy resin was only -249 yuan/ton, indicating that the entire industry is still operating at a loss.
Currently, China’s epoxy resin production capacity is in a rapid expansion phase, with total capacity expected to reach nearly 4 million tons/year in 2024. However, downstream consumption growth lags far behind the epoxy resin capacity expansion, leading to intense competitive pressures within the industry. The limited consumption capacity of downstream end-user industries such as coatings, electronics, and wind power cannot effectively absorb the new epoxy resin capacity, further escalating the supply-demand imbalance.
In response to the prominent domestic supply-demand imbalance, many companies are increasing their export efforts. Data shows that China’s cumulative epoxy resin exports from January to September reached 196,600 tons, a 49.61% increase from the same period last year. Annual exports are expected to exceed 250,000 tons, setting a new record. However, issues such as overcapacity, weak demand, and production losses continue to plague material manufacturers.
Against this backdrop, some companies are seeking new avenues for growth. Recently, Dalian Qihua New Material Co., Ltd., a controlling subsidiary of Kangda New Materials (Group) Co., Ltd., transferred its epoxy resin technology to a company primarily engaged in the production and sales of petrochemical products. The two parties signed a “Technology License and Service Contract” with a total contract value estimated at 61 million yuan, which came into effect in September this year. However, the specific details of the counterparty have not been disclosed.
Kangda New Materials is a well-known leading enterprise in China’s adhesive industry, with businesses covering three major sectors: adhesives and special resin new materials, electronic information materials, and electronic technology. This technology transfer is not only a significant step for Dalian Qihua New Material to extend its reach into the upstream core raw material synthetic resin sector but also a proactive attempt to seek new pathways amidst industry challenges. Yet, for the entire epoxy resin industry, finding effective solutions to address overcapacity, weak demand, and other pressing issues remains a critical challenge that needs to be urgently addressed.