China's epoxy resin industry has reached a new turning point, focusing on expanding exports to international markets to combat the current surplus. This situation stems from the country's capacity expansion since 2020 to accelerate the sector's slow development.
China Epoxy Resin Production Capacity Changes
Source: OilChem
Epoxy Resin Production and Capacity Growth in China
According to statistics from OilChem, China's epoxy resin production capacity is expected to soar to 3.76 million tonnes per year by the end of 2024, a 90% increase from 1.98 million tonnes per year in 2017. Alongside this capacity expansion, domestic supply is also set to rise, potentially reaching 1.78 million tonnes in 2024, up 48% from less than 1.20 million tonnes in 2017. However, due to the oversupply situation resulting from this expansion, many Chinese manufacturers are aggressively expanding globally and seeking foreign customers.
Import and Export Trends
China Epoxy Resin Import and Export Trends
Source: OilChem
Between 2017 and 2024, there was a noticeable shift in China's epoxy resin imports. From 2017 to 2020, China's imports of epoxy resin increased, raising the country's import dependence rate from 19.69% to 24.31%. After peaking in 2020, imports quickly plummeted as local supply dramatically rose and became more competitively priced, favoring exports. From January to May 2024, China shipped 101,500 tonnes of epoxy resin, up 31.99% over the previous year. It is projected that China will set a new record by exporting 200,000 tonnes of epoxy resin this year, causing its import dependency rate to turn negative and giving it more influence over the pricing of imported products.
China's consistently growing epoxy resin exports have attracted attention from regions like Europe and the United States. In early April 2024, the U.S. Epoxy Resin Producers Ad Hoc Coalition submitted a petition, claiming that unfair trade imports of certain epoxy resins from countries like China have substantially harmed the U.S. domestic epoxy resin industry. The petitioners estimated dumping margins for relevant regions: China at 264.87% to 351.97%. On June 29, 2024, India's Ministry of Commerce and Industry announced the initiation of an anti-dumping investigation into liquid epoxy resin originating from or imported from mainland China, South Korea, Saudi Arabia, Thailand, and Taiwan Province of China. Additionally, on July 1, 2024, the European Commission launched an anti-dumping investigation into epoxy resin imports from China, South Korea, Taiwan Province of China, and Thailand.
Challenges and Recommendations
In the upcoming year, more regional-focused chemical markets are expected to replace the nearly collapsing global chemical trade system. To overcome challenges from anti-dumping investigations, Chinese epoxy resin producers should consider improving and diversifying their products and sales models to avoid low-price competition. This strategy will not only help companies establish a stronger foothold in international markets but also enhance China's influence in the global epoxy resin market.
Written by Todd Zhu, todd@oilchem.net
Edited by Navy Liu, liuchuanjun@mysteel.com
