DEEP RESEARCH · EPOXY/ECH

Why Chinese Epoxy Prices Spiked: The ECH and Glycerine Supply-Chain Shock

Starting from a refining/chemical weekly note, this report maps the supply-chain, tariff, and demand structure behind the epoxy surge

Date: 2025-09-14 · refining/chemical feedstock price view · Naver Blog

0. Bottom line first

1. Starting point: the odd signal in analyst Youn Jae-sung's weekly note

The source began as a follow-up after reading Hana Securities analyst Youn Jae-sung's Weekly Monitor. The report link is https://bit.ly/47INQFh, and the Telegram post is preserved at https://t.me/energy_youn/2016.

Official fact: The note highlighted refining margin of $9.8/bbl, up $0.5 WoW, range-bound petrochemicals, ECH up 11% over three weeks, and epoxy up 7% over two weeks. Top picks were S-Oil, KCC, Korea Petrochemical, Lotte Fine Chemical, and Lotte Chemical.

The same note connected the September 12 G7 finance-minister discussion on Russia-related sanctions, Trump's September 13 proposal that NATO impose 50-100% tariffs on China, and OPEC+'s September 7 in-principle agreement on October output increases to a possible weak Asian OSP environment in 2026. OPEC+ had already restored the second voluntary cut of 2.2mn b/d through a 548k b/d September increase, and confirmed a 137k b/d cut relaxation for October. Saudi Aramco lowered the October Arab Light OSP to Asia by $1/bbl MoM to $2.2/bbl.

2. ECH shock: the weak point in China's epoxy chain

Official fact: The source says more than 80% of China's ECH capacity relies on glycerine, a biodiesel byproduct, as feedstock. That leaves China's epoxy industry highly exposed to global glycerine supply-chain volatility.

The glycerine price surge reflected European shortages, higher US pharmaceutical and personal-care demand, Southeast Asian biodiesel disruptions, and palm-oil production swings. The source identifies proposed US tariffs of 24% on Malaysia and 32% on Indonesia, both key glycerine exporters, as the decisive catalyst.

By contrast, the propylene-based ECH route stayed relatively stable because the global propylene market, especially in China, remained oversupplied. Producers in Korea and other regions using the propylene route are therefore less exposed to the glycerine shock and currently enjoy a cost-competitiveness advantage. Liquid chlorine prices were mixed, but the source treats their effect as much smaller than the glycerine-driven cost spike.

In August and September 2025, Chinese ECH plants ran at a very low 50-60% operating rate because of planned maintenance and unexpected outages. Shutdowns at key facilities such as Jiangsu Ruiheng directly hit supply, and ECH prices jumped 4.6% in August 2025. Typhoon-driven port congestion in the Yangtze River Delta added logistics pressure. As of September 15, 2025, ECH prices had risen 11% over three weeks to a three-year high, while epoxy prices rose 7% in two weeks to a seven-month high.

3. Global supply-demand reset: Western retreat and Asian expansion

Olin in the US described the market as a period of trough demand and is restructuring around profitability rather than volume. The source mentions epoxy facility closures in Gumi, Korea and Brazil, restructuring plans for the major Freeport facility in the US, and an operating loss in the epoxy segment in 2Q 2025.

In contrast, Korea's Kukdo Chemical is expanding aggressively toward Asia, where 80% of its revenue is generated. The source says it plans to more than double Indian capacity from 40k tonnes to 100k tonnes by 2025 and is also pursuing Chinese capacity expansion. In Europe, ExxonMobil, Dow, SABIC, and TotalEnergies are cited as part of a broader permanent closure trend in basic-chemical assets due to high energy costs and weaker competitiveness.

On demand, construction and coatings, currently the main epoxy demand bases, are weak. But long-term growth remains strong in wind-turbine blades, EV lightweight composites and adhesives, and semiconductor packaging. The source stresses that the current price increase is cost-push, not demand-pull.

4. Tariffs and industrial restructuring

US and EU anti-dumping and countervailing duties restrict low-priced Asian epoxy resin access to Western markets and accelerate regional price fragmentation. The EU imposed final anti-dumping duties of 10.8-33% on epoxy resin from China, Taiwan, and Thailand while excluding Korean products. The source says preliminary US determinations imply relatively low 6-9% rates for Korean producers but punitive 30-70% rates for Chinese and Taiwanese products.

Separate from near-term trade disputes, China is expected to formalize petrochemical restructuring through the 15th Five-Year Plan beginning in 2026. The source says potential phase-out targets include small teapot refineries with annual capacity below 2mn tonnes and low-efficiency, high-carbon coal/methanol-to-olefin facilities.

5. Outlook and strategic implications

The source frames the shock as the overlap of three drivers. First, China's glycerine-dependent ECH structure met a global glycerine supply crisis. Second, Chinese ECH operating rates and logistics created a domestic bottleneck. Third, Western production cuts, Asian expansion, and US/EU trade barriers created global realignment and fragmentation.

In the short term, from 4Q 2025 to 1Q 2026, Chinese epoxy prices may remain volatile depending on ECH production normalization and glycerine stabilization. Demand destruction or recovered ECH operating rates could pull prices down. In 2026, the Asia-West price gap may persist or widen. As of September 2025, Northeast Asian epoxy prices were about $1,980/tonne, or $1.98/kg, while North American prices were about $3,430/tonne, or $3.43/kg.