Ethylene Oxide

EO (Ethylene Oxide) Recent Commodity Market Intelligence

I. Price Dynamics

* Recent Price Trend:
* In early July 2026, EO prices underwent a sharp correction; however, they began rebounding on July 22. As of July 22, the domestic EO market average price stood at RMB 7,000/ton, representing a 2.94% increase from the beginning of the month.
* As of July 28, mainstream ex-factory posted prices for EO rose across regions: RMB 7,300/ton in the East China region; RMB 6,900–7,000/ton in the South China region; and RMB 6,800–7,450/ton in the Central China region.

* Price Volatility Range:
* Recent EO prices have exhibited significant volatility, with the lowest price over the past three months at RMB 6,400/ton and the highest reaching RMB 9,000/ton.

II. Supply-Demand Situation

* Supply Situation:
* EO supply is expected to increase in July, driven by new plant commissionings and restarts of previously shut-down units, gradually intensifying supply pressure.
* In mid-to-late June, multiple units—including those at Gulai, Yangzi, Wanhua, and Fude—underwent maintenance shutdowns; the resulting output reduction offset incremental production from restarted facilities, thus providing some support to July supply. However, as these maintenance units resume operations, supply pressure will progressively mount.

* Demand Situation:
* Downstream sectors are currently in their traditional off-season, with limited improvement in demand. The polycarboxylate superplasticizer monomer industry operates at low utilization rates; non-ionic surfactant production capacity utilization declined slightly year-on-year; ethanolamine production remains relatively high but is supported only by essential-order demand—overall demand growth remains modest.
* Emerging sectors—including electronic specialty gases, semiconductor packaging materials, and new-energy carbonate applications—are experiencing demand growth; however, aggregate demand growth still lags behind rapid capacity expansion.

III. Cost Structure

* Raw Material Prices:
* The July EO price increase was primarily driven by rising ethylene costs stemming from higher crude oil prices. Recurring Middle East–Iran geopolitical tensions pushed up international crude oil and naphtha prices, causing Asian spot ethylene prices to rise continuously, thereby elevating EO feedstock costs.
* Ethylene prices have fluctuated narrowly, and cost-support at the bottom has stabilized—but weakened overall support for EO pricing. Meanwhile, ethane prices remain low, conferring a cost advantage to light-hydrocarbon integrated producers.

* Profitability:
* With raw material prices persistently elevated, although EO prices have followed suit upward, the magnitude of EO price gains has lagged behind raw material increases—compressing manufacturers’ profit margins.

IV. Market Sentiment & Trading Activity

* Market Sentiment:
* Broader chemical sector sentiment has improved, and downstream industries’ low-level restocking driven by essential demand jointly contributed to the EO price uptrend.
* Weakening U.S. economic data and reduced expectations of further interest rate hikes have bolstered commodity market sentiment overall, offering some support to the EO market.

* Trading Activity:
* Following earlier low EO prices, downstream buyers—including polyether, superplasticizer, and detergent raw material users—engaged in concentrated restocking based on essential demand, while traders accumulated inventory, collectively stimulating trading volume and pushing quotations upward.

Analysis & Outlook

* Short-Term Outlook:
* EO prices are expected to trade in a narrow range in the near term. Continued release of new capacity on the supply side, coupled with resumption of maintenance units and seasonal weak downstream demand, will cap upside potential. Narrow-range fluctuations in ethylene prices further diminish cost-based support for EO.

* Medium-to-Long-Term Outlook:
* Entering August, markets gradually transition toward the traditional peak season; pre-“Golden September” demand may begin releasing earlier, suggesting EO prices will likely consolidate within a narrow band.
* In September, improved downstream demand sentiment may lift price benchmarks; however, the National Day holiday in October typically leads to reduced operating loads downstream, exerting downward pressure and possibly triggering a modest price correction.
* From November to December, as northern regions enter winter, construction activity slows seasonally—curtailing real demand—while new plant commissionings and fewer maintenance outages intensify supply-demand imbalance. Consequently, EO price benchmarks may continue drifting lower.

Forecast

* Price Forecast:
* EO prices in H2 2026 are projected to follow an inverted “N”-shaped trajectory, with average price levels lower than those in H1. Prices will remain subdued during Q3’s off-season, then trend downward in Q4 amid slowing northern construction activity and new capacity coming online—price benchmarks may settle between RMB 6,200–6,500/ton.

* Market Trends:
* Supply Side: Continuous new capacity releases are accelerating industry consolidation; privately owned large-scale refining & petrochemical enterprises—leveraging integrated advantages—are gaining dominant market positions.
* Demand Side: Traditional end-use segments’ share of total consumption is declining; demand diversification across emerging sectors enhances resilience, yet overall demand growth remains insufficient to match rapid capacity expansion.
* Geopolitical Risk: Recurrent Middle East tensions could disrupt crude oil supply, indirectly lifting ethylene costs—geopolitical developments warrant close monitoring.
* Policy Impact: Stricter environmental regulations may accelerate elimination of outdated capacity and promote green transformation across the industry; however, such policies may also amplify short-term supply-demand volatility.