Jinan Zhuocheng Bio-Tech Co., Ltd.

In conventional market logic, continuously rising raw material prices should naturally translate into higher profits and stronger revenues for manufacturers. However, the reality of the chemical industry is quite different: upstream raw material costs continue to rise, while downstream product prices remain under pressure and demand stays weak. The entire industrial chain is caught in a difficult situation characterized by “rising prices without rising revenues, and production and sales without profits.”

As of August 31, 2026, three major chemical products—propylene oxide, bisphenol A, and epoxy resin—were all operating in loss-making territory. Several leading manufacturers have suspended production for maintenance or reduced operating rates, highlighting the increasing pressure across the industry and placing greater survival pressure on small and medium-sized producers.

Propylene Oxide: Average Weekly Loss of Around RMB 750/MT

In Shandong, mainstream spot transactions for propylene oxide were reported at RMB 9,350–9,500/MT ex-works on a cash basis, with a weekly average price of RMB 9,410/MT, down 5.52% week-on-week. In East China, mainstream delivered prices were negotiated at RMB 9,600–9,800/MT, with a weekly average of RMB 9,710/MT, down 4.05% week-on-week.

Last week, the loss under the chlorohydrin process narrowed slightly, with the average weekly margin at around RMB -750/MT, representing a 76.06% week-on-week increase in losses.

Some production units in Lianyungang were shut down, while crude oil and propylene prices remained at high levels. At the same time, social inventories continued to decline. Some producers cautiously raised their quotations, although overall price fluctuations remained limited.

The real turning point came with an unexpected shutdown of production facilities in the Yantai region. Regional supply declined sharply, while downstream producers increased their purchases of propylene oxide to ensure stable production. As downstream demand was released, purchasing activity increased significantly and market sentiment improved. With suppliers holding limited inventories, sales were restricted, pushing prices sharply higher.

However, after prices rose rapidly, downstream buyers gradually showed stronger resistance to high-priced cargoes. Market negotiations weakened in the middle of the week, and the market entered a stalemate.

Toward the end of the week, the restart of some production units originally scheduled to resume operations was delayed, meaning the expected additional supply failed to materialize. Meanwhile, industry-wide social inventories remained low, while propylene prices rose sharply again, providing stronger cost support. Producers showed a strong willingness to defend prices, and the domestic propylene oxide market remained locked in a high-level standoff between buyers and sellers.

Bisphenol A: Losses Continue to Widen, Reaching Around RMB 1,300/MT, Limiting Industry Operating Rates

Compared with propylene oxide, the loss situation in the bisphenol A industry is even more severe, with losses continuing to deepen.

As of August 31, the East China bisphenol A market was quoted at around RMB 9,400/MT, up RMB 100/MT, or 1.20%, from August 20. Although raw material costs continued to rise, finished-product prices remained constrained by weak downstream demand and failed to increase accordingly.

At present, the average loss of domestic bisphenol A producers has reached approximately RMB 1,357/MT, with the loss narrowing by only RMB 5/MT from the previous week. Overall profitability remains under significant pressure.

Deep losses have triggered a wave of maintenance shutdowns across the domestic bisphenol A industry. Operating rates have struggled to recover.

• Shandong Fuyu Chemical: Its 180,000 MT/year bisphenol A unit was shut down for maintenance from August 23 and is expected to restart at the end of September.
• Nantong Xingchen Synthetic Materials: Its 150,000 MT/year bisphenol A unit entered maintenance on August 25, with maintenance expected to last around 30 days.
• Huizhou Zhongxin Industrial: Its 240,000 MT/year bisphenol A unit remains shut down, with the restart date yet to be determined.
• Nan Ya Plastics Ningbo: Its Phase I and Phase II bisphenol A units have a combined capacity of 300,000 MT/year. Phase II is under maintenance, while Phase I remains in normal operation.
• Wanhua Chemical: Its 520,000 MT/year bisphenol A unit entered maintenance on August 10, with maintenance expected to last approximately 45 days.

The market is currently in a clear stalemate. Upstream cost support remains firm, and producers are strongly defending prices. However, downstream users have very limited acceptance of high-priced cargoes and are mainly consuming existing inventories. New purchases remain cautious, market activity is sluggish, and the industry's loss-making situation remains difficult to resolve.

Epoxy Resin: Losses Narrow Slightly, but Weak Demand Continues to Weigh on Recovery

As a key downstream product in the value chain, epoxy resin has also failed to escape the loss-making environment, although the scale of losses has improved slightly.

As of August 31, mainstream negotiations for East China liquid epoxy resin E-51 were at RMB 14,800–15,000/MT delivered in large drums on a bank acceptance basis, up 0.34% from August 20. The weekly average price was RMB 14,940/MT, up 0.20% week-on-week.

A slight decline in production costs provided manufacturers with temporary relief. However, the average loss of liquid epoxy resin E-51 reached RMB 476.40/MT, with the loss widening 131.71% week-on-week. Meanwhile, solid epoxy resin E-12 recorded an average loss of RMB 76.85/MT, with its average margin deteriorating by 136.59% week-on-week.

However, negative fundamentals remain prominent, and the industry's recovery momentum is still weak.

End-user demand for epoxy resin remains sluggish, downstream factory operating rates are low, and overall order volumes remain limited. Cost pass-through to downstream users is also difficult, resulting in a strong wait-and-see sentiment. Buyers are prioritizing the consumption of existing inventories, while new orders remain weak. Market activity is supported mainly by scattered rigid demand, with no significant improvement in bulk transactions.

Under pressure from weak demand, industry operating rates have continued to decline. Some liquid resin facilities in East China and Shandong have reduced operating rates, while solid resin facilities in Huangshan have also experienced declining utilization. Overall supply-demand imbalance remains pronounced, and the market is expected to remain weak and range-bound in the short term.

Industry Outlook: Pressure Across the Entire Value Chain, with No Clear Short-Term Reversal in Sight

Looking across the broader phenol-acetone and polyurethane-related value chains, the current market presents a difficult cycle characterized by rising upstream raw material costs, losses in midstream products, and weak downstream demand.

The three major products—propylene oxide, bisphenol A, and epoxy resin—are all currently operating at losses. Producers are relying on production shutdowns, reduced operating rates, and inventory destocking to maintain market balance, while overall operating pressure continues to increase.

At present, cost-side support remains relatively strong, but there has been no significant improvement in end-user demand. The cost pass-through mechanism remains disrupted, resulting in intense competition between bullish and bearish market forces.

In the short term, the loss-making situation in the chemical raw material industry is unlikely to be fundamentally reversed. The market may continue to fluctuate at low levels while waiting for a recovery in downstream demand and an improvement in producer margins.