China is set to cancel export tax rebates for polyols starting April 1, 2026, a policy shift that will significantly increase cost pressures on exporters. While China’s polyether export volumes have maintained growth momentum in recent years, the market is plagued by falling prices due to oversupply and a dominance of low-end products, leading to fierce "internal competition." This policy aligns with China’s broader efforts to curb overcapacity and promote high-quality industrial development. Its core goal is to end the industry’s reliance on policy subsidies, encourage market-driven restructuring, and push enterprises toward technological innovation, global supply chain optimization, and value-based competition. For detailed product information and the latest industry insights on polyether polyols, you can visit our Polyether Polyol product page.
I. Policy Implementation: Polyol Export Tax Rebate Enters "Countdown to Cancellation"
In early 2026, China’s Ministry of Finance issued an announcement on adjusting export tax rebates, explicitly removing polyether products from the export tax rebate catalog. The policy will take formal effect on April 1, 2026. Although this change was not unexpected for the polyether industry, it still delivers a substantial cost shock.
As a key policy tool to boost foreign trade, export tax rebates have long been an important support for polyether enterprises to alleviate cost pressures. In recent years, raw material costs in the polyether industry have remained high: in 2024, raw material costs accounted for 72.4% of total production costs, an increase of 3.1 percentage points from the previous year. Coupled with intensifying price competition in the global market, corporate profit margins have already been squeezed to a razor-thin level. The cancellation of export tax rebates directly removes the cost buffer in the export process, which will weaken the price competitiveness of China’s polyether export products and further compress export profit margins.
Notably, this policy adjustment is not isolated but coincides with the broader context of global trade rule restructuring. Currently, major markets such as the United States, India, and Brazil are continuously raising trade barriers, frequently using trade protection tools such as anti-dumping and countervailing measures. Polyether products are facing increasing risks of foreign trade countervailing barriers. For example, in 2024, Brazil issued a preliminary affirmative anti-dumping ruling against Chinese polyether polyols, further squeezing export opportunities. Chinese polyether enterprises now face the dual challenge of "losing domestic tax rebate benefits while encountering foreign trade barriers," which undermines the traditional foundation of their cost-based competitive advantage.
II. Export Status: Hidden Risks of "Low-Price Internal Competition" Behind Volume Growth
From a data perspective, China’s polyether export market has exhibited a distinct trend of "scale expansion amid price pressure" in recent years. In 2024, China’s polyether exports achieved strong growth, with annual export volume reaching 2.1543 million tons, a year-on-year increase of 27.33%. The main export destinations included Turkey, Vietnam, and India, with an average export price of $1,407 per ton. In 2025, export volumes continued to expand, though the growth rate slowed down. Intensified market competition led to mounting price pressures: in the first half of 2025, export volume reached 1.3154 million tons, a year-on-year increase of 19.43%. Exports to emerging markets such as ASEAN performed particularly well in the first three quarters—for instance, exports to the Philippines surged by 98.07% year-on-year. Meanwhile, India replaced Turkey as the largest export destination, but the average export price fell to around $1,270 per ton, a year-on-year decline. Overall, China’s polyether exports are transitioning from high-speed growth to steady expansion, with the market structure continuously deepening amid adjustments.
However, behind the robust volume data, concerns about "low-price internal competition" are becoming increasingly prominent. From January to September 2025, the average export price of primary-form polyethers declined year-on-year. This phenomenon stems from the supply-demand imbalance caused by rapid domestic capacity expansion and slower downstream demand growth. Enterprises have resorted to price cuts to seize market share, and the decline in raw material prices has further dragged down the average export price. More alarmingly, China’s polyether exports are still dominated by mid-to-low-end standard products. Although the proportion of high-value-added specialty polyethers in exports has increased, conventional polypropylene glycol (PPG) still holds the dominant share. This structural weakness in product mix makes it difficult for enterprises to break free from the quagmire of price competition.
III. National Policy Direction: Explicitly Curbing "Internal Competition" and Strengthening Industry Early Warning
The cancellation of polyether export tax rebates is not merely a policy tightening measure. Notably, polyether and photovoltaic products were included in the same batch of products losing export tax rebates—a policy linkage that clearly signals the government’s stance on curbing overcapacity and "internal competition" in key monitored sectors. This aligns with China’s broader national direction in recent years of curbing "internal competition" and promoting high-quality industrial development. From the central to local governments, a series of policy measures have been intensively implemented to define development boundaries for monitored industries including polyether.
High-level meetings have repeatedly sent clear signals: the mid-2024 Politburo meeting emphasized strengthening industry self-discipline to prevent "cutthroat internal competition"; the year-end Central Economic Work Conference further called for comprehensive measures to curb "internal competition" and regulate the behavior of local governments and enterprises; the 2025 Government Work Report listed curbing "internal competition" as a key task, advocating for the removal of local protectionism and market fragmentation to address bottlenecks hindering economic circulation. Officials from the National Development and Reform Commission (NDRC) also stressed the need to "intensify efforts to break internal competition" in traditional sectors and prevent low-level, homogenized redundant construction.
Policy implementation has seen coordinated efforts across multiple departments: the Ministry of Industry and Information Technology (MIIT) and seven other departments, in the Action Plan for High-Quality Development of the New Energy Storage Manufacturing Industry, explicitly called for enhanced capacity monitoring and early warning for sectors such as lithium batteries to prevent blind investment and disorderly development—an approach equally applicable to the polyether industry, which faces overcapacity risks. The State Administration for Market Regulation has also pledged to strengthen price supervision in key industries, curb "cutthroat internal competition," and implement quality and branding strategies to guide industries out of the trap of internal competition. At the industry level, leading enterprises and industry associations have begun to take proactive actions, such as formulating self-regulation conventions and holding closed-door seminars to discuss measures against below-cost pricing. These efforts further reflect the national directive to curb internal competition in monitored industries, forming a synergy of "policy guidance + industry self-discipline."
IV. End of an Era: Moving Beyond Subsidy Dependence, Driving Industry Restructuring Through "Natural Elimination"
The core rationale behind canceling polyether export tax rebates is to end the industry’s reliance on policy subsidies and use market-driven "natural elimination" to facilitate industry restructuring. This directly reflects the state’s stance on internal competition: no selective subsidies, allowing enterprises to survive and thrive in fair competition based on core competitiveness.
Previously, supported by policy subsidies and tax rebates, some polyether enterprises neglected technological innovation and product upgrades, blindly expanding capacity and exacerbating homogenized competition. With the implementation of policies such as the Fair Competition Review Regulations and the Guidelines for Building a Unified National Market (Trial), local governments’ practices of attracting investment through excessive incentives such as tax breaks and preferential land use have been strictly regulated. The era where the polyether industry relied on policy benefits for competitive advantage has officially come to an end.
Moving forward, sustained pressure on profit margins will become the new norm for the polyether industry, and small and medium-sized enterprises lacking core competitiveness will face survival risks. This "natural elimination" is not intentional suppression but a necessary growing pain to drive high-quality industrial development. On one hand, it will force enterprises to abandon the mindset of low-price competition, redirect resources to technological R&D, and focus on developing high-end products such as high-activity polyethers, low-unsaturation polyethers, and specialty functional polyethers to enhance product value. On the other hand, it will accelerate industry consolidation, channeling resources toward leading enterprises with technological reserves, global operational capabilities, and industrial chain synergies, fostering a healthy industry structure characterized by "leading players guiding the market and differentiated complementarity among enterprises."
For polyether enterprises, the end of the export tax rebate era is not the end but a starting point for transformation. Breaking free from subsidy dependence and escaping internal competition hinges on shifting from "cost competition" to "value competition"—either by seizing the high-end market through technological innovation, optimizing supply chain resilience through global layout, or improving operational efficiency through refined management. Only by proactively embracing change can enterprises stand firm amid industry restructuring and seize the structural opportunities brought by the reorganization of the global polyether supply chain. For the latest updates on polyether industry policies and market trends, keep an eye on our Polyether Polyol dedicated page.
Key Takeaways
The cancellation of polyether export tax rebates starting April 1, 2026, marks a pivotal turning point for China’s polyether industry, signaling the end of the subsidy-dependent era and the arrival of market-driven restructuring. While the policy will increase cost pressures on exporters and intensify industry competition in the short term, it will also force enterprises to focus on technological innovation, product upgrading, and value creation in the long run. For the industry as a whole, this adjustment will help curb overcapacity and internal competition, promoting the development of high-quality, sustainable industrial ecology. In the context of evolving global trade rules, Chinese polyether enterprises must accelerate their transformation toward high-value-added products and global supply chain optimization to maintain competitiveness in the international market.
