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[Industry Focus]：Liquid epoxy resin industry into a "triple dilemma": price, gross profit, production capacity fell.

Read： 499 Time：9months ago Source：隆众资讯、环氧树脂交流与交易

liquid epoxy resin this synthetic material, which occupies an important position in the electronics, composite materials, coatings, adhesives and other industries, has shown a wide range of application prospects in the Chinese market in recent years. However, since 2021, as the domestic liquid epoxy resin has entered a centralized expansion cycle, its market trend has begun to undergo subtle changes. Affected by the relationship between supply and demand and the external economic environment, the price of liquid epoxy resin has been declining, and the gross profit and capacity utilization of the industry have shown a downward trend.

1, market prices continue to decline, the decline is significant.

Looking back at 2021, the liquid epoxy resin market once showed a prosperous scene. Driven by the strong demand of downstream wind power, electronics and other industries, the market price broke through the 40000 yuan/ton mark in April of that year, setting a record high. However, the good times are not long, with the continuous expansion of production capacity, the market supply and demand relationship gradually imbalance. By March 20, 2024, the ex-factory price of clean water in the mainstream market in East China had fallen to 12,500-12,900 yuan/ton, down 18800 yuan/ton or 59.68 percent from the 2021 high. The average price in the first quarter of 2024 was only 12994 yuan/ton, showing a clear downward trend compared with the same period in the past few years.

2021-2024年中国液体环氧树脂市场价格走势变化.jpg

Data source: Longzhong Information

this downward price trend reflects the profound changes in the supply and demand relationship of the liquid epoxy resin market. The continuous release of new production capacity has intensified market competition, while the growth of downstream demand has failed to keep up with the pace of supply, resulting in a continuous downward shift in price focus.

2, the industry gross profit has shrunk significantly, the phenomenon of frequent losses

with the continued decline in market prices, the gross profit space of the liquid epoxy resin industry has also been severely squeezed. According to Longzhong Information data monitoring, in the first quarter of 2024, the average gross profit of the liquid epoxy resin industry has dropped to -280 yuan/ton, showing a significant decline compared with the same period in the past few years. This means that some enterprises have suffered losses in the production process, and the profitability of the industry is worrying.

2021-2024年华东液体环氧树脂毛利走势变化.jpg

Data source: Longzhong Information

there are two main reasons for the sharp decline in the industry's gross profit: first, the continued decline in market prices has reduced the company's sales revenue; second, the rise in raw material costs and the increase in production costs have further compressed the company's profit margins. Under the double pressure, it is difficult to improve the profitability of the industry.

3, capacity utilization rate hovering low, industry pressure highlighted

in addition to the problem of price and gross profit, the capacity utilization rate of liquid epoxy resin industry also shows a low trend. In the first quarter of 2024, the overall capacity utilization rate of domestic liquid epoxy resin was only 47.83 per cent, down from the same period in the past few years. Especially during the Spring Festival holiday, affected by the shutdown and maintenance, the industry's capacity utilization rate once fell below 20%, a record low.

2022-2024年中国环氧树脂产能利用率走势图.jpg

Data source: Longzhong Information

the low level of capacity utilization reflects the pressure and challenges facing the industry. On the one hand, the launch of new capacity increases market supply; on the other hand, the lack of downstream demand leads to sales difficulties, which in turn affects the full utilization of capacity. In the context of the imbalance between supply and demand, enterprises have to reduce production or stop to deal with market pressure.

To sum up, the liquid epoxy resin market has experienced a short period of prosperity, and is facing multiple challenges such as price decline, gross profit shrinkage, and low capacity utilization. In the future, with the continued release of new capacity and changes in downstream demand, the market trend is still full of uncertainty. Enterprises need to pay close attention to market dynamics, strengthen cost management and risk control to deal with potential market risks.

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