Chemical Raw Materials on the Rise
The chemical industry has kicked off 2026 with a dramatic price surge, led by propylene oxide (PO)—a core intermediate that has hit multi-year highs and triggered a chain reaction across the industrial chain. From upstream raw materials to downstream coatings, prices of key products including propylene glycol, epichlorohydrin, pigments, and polyester resins are soaring, pushing cost pressures to unprecedented levels for manufacturers. Notably, a leading marine coatings producer has announced price hikes of up to 30%, while the industry faces growing divergence: large enterprises leverage scale to pass on costs, while small and medium-sized enterprises (SMEs) grapple with the dilemma of balancing price increases and market acceptance. This blog dissects the drivers behind the price surge, its impact across the supply chain, and the strategic challenges facing stakeholders.
Propylene Oxide (PO): The Core Engine of the Price Surge
Propylene oxide has emerged as the undisputed leader of the chemical price rally, with both futures and spot markets posting strong gains:
• Market Performance: As of the 3:00 PM close on January 21, the PO sector index closed at 720.48 points, after touching a nearly three-year high of 728.7 points in the morning session. Over the past 20 days, the sector has surged 14.43%, with a 10.18% gain in just three days. Individual stocks such as Hongqiang Shares and Hongbaoli Group hit limit-up, while Sino Catalyst, Qixiang Tengda, and Meibang Technology continued their upward momentum.
• Spot Price Rally: The spot market benchmark price climbed to 8,500 yuan/ton on January 20, a 9.91% jump from 7,733.33 yuan/ton at the start of January—reaching a near two-year high. This simultaneous strength in futures and spot markets has made PO the primary driver of the industry-wide price surge, transmitting upward pressure to both upstream and downstream segments.
Chain Reaction: Upstream and Downstream Raw Materials Follow Suit
The PO price rally has quickly rippled through related products and terminal industries, with key raw materials for coatings and chemicals seeing significant price increases:
1. PO-Derived Products: Propylene Glycol and Epichlorohydrin
• Propylene Glycol: Supported by rising PO prices, manufacturers have actively raised quotations despite stable production and sufficient spot supply. As of January 16, the assessed transaction price for propylene glycol in Shandong stood at 5,500–5,800 yuan/ton, up 1.35% from December 31, 2025.
• Epichlorohydrin: Having already entered a long-term upward channel in 2025, its price rose 34.81% from January to September 2025—from 9,050 yuan/ton to 12,200 yuan/ton. Driven by cost support (raw material glycerin prices rose 53.60% over the same period) and supply tightening from plant maintenance, the benchmark price remained at a medium-to-high level of 11,600 yuan/ton as of January 21, 2026.
2. Other Core Raw Materials for Coatings
• Pigments: Phthalocyanine blue and phthalocyanine green products have seen price hikes of 2,000–2,500 yuan/ton, with Shuangle Pigments announcing a 1,000 yuan/ton increase for phthalocyanine products.
• Sulfuric Acid: The market remains strong, with 98% smelting acid in Shandong priced at 850–920 yuan/ton and 98% sulfur-based acid at 1,000–1,140 yuan/ton. Supported by high raw material (sulfur and pyrite) prices and upcoming peak demand, several producers have raised prices by 40–50 yuan/ton, indirectly driving up titanium dioxide prices to 13,900 yuan/ton (a 1.16% weekly gain) amid capacity cuts from Jinpu Titanium Industry’s subsidiary shutdown.
• Polyester Resins: Leading companies including Allnex, Qingtian Material Technology, Anhui Zhicheng Industrial, and Huangshan Xiangrong New Materials collectively announced a 500 yuan/ton price increase effective January 1, 2026, citing sustained raw material cost hikes.
• Dipentaerythritol: Perstorp raised prices by up to 100% starting January 1, responding to exceptionally strong market demand and further amplifying industrial chain costs.
Terminal Impact: Coatings Companies Face Cost Crisis, Giants Announce 30% Hike
The cumulative cost pressure from rising raw materials, coupled with higher crude oil, precious metals, non-ferrous metals, and transportation costs, has pushed coatings companies to the brink. To mitigate losses, leading enterprises have initiated price adjustments:
• Chugoku Marine Paints: The leading marine coatings manufacturer announced successive price increases starting January 2026, with core antifouling bottom coatings seeing hikes of up to 30%—a clear signal that the coatings industry’s price adjustment cycle is underway.
• Industry Divergence: While large companies with scale and supply chain advantages can effectively pass on cost pressures to downstream customers, most SMEs face a painful dilemma: raising prices may lead to lost orders, while maintaining original prices means absorbing cost erosion. Downstream demand hesitation and uneven market acceptance are further widening the gap between strong and weak players.
Why the Price Surge? Key Drivers
The current wave of chemical raw material price increases is driven by a confluence of factors:
1. Cost Push: Rising prices of core intermediates (PO, glycerin) and energy (crude oil) form the foundation of the price rally.
2. Supply Tightening: Periodic maintenance shutdowns at multiple plants (e.g., epichlorohydrin, titanium dioxide) have reduced market supply.
3. Strong Demand: Robust demand for end products in industries such as coatings, marine, and construction has supported raw material price increases.
4. Market Sentiment: Bullish sentiment in futures markets has reinforced spot price gains, creating a self-reinforcing upward cycle.
Strategic Recommendations for Stakeholders
Navigating the current price surge requires proactive adaptation to mitigate risks and seize opportunities:
For Manufacturers & Suppliers
• Lock in Raw Material Supplies: Secure long-term contracts with trusted suppliers to stabilize costs amid volatility. Partner with reliable providers like Achilles Chemical to ensure consistent access to high-quality raw materials.
• Optimize Product Mix: Shift focus to high-value-added products to offset cost pressures, as these segments have greater pricing flexibility.
• Transparent Communication: Engage with downstream customers to explain cost drivers, justifying price adjustments and maintaining long-term partnerships.
For Downstream Buyers (Coatings, Plastics, etc.)
• Inventory Management: Conduct targeted pre-purchasing of critical raw materials to avoid further cost increases, but avoid overstocking amid uncertain demand.
• Supplier Diversification: Reduce reliance on a single supplier to mitigate supply chain risks and negotiate more favorable terms.
• Cost Optimization: Explore alternative raw materials or modify formulations where possible, and improve production efficiency to absorb cost hikes.
For SMEs
• Collaborate for Bargaining Power: Form alliances with other SMEs to enhance purchasing power and negotiate better terms with raw material suppliers.
• Focus on Niche Markets: Differentiate from large enterprises by targeting specialized niche markets with unique product requirements, reducing price sensitivity.
Conclusion: Industry Reshuffling Amid Price Volatility
The 2026 chemical raw material price surge, led by propylene oxide, is more than a short-term market fluctuation—it is a catalyst for industry reshuffling. While cost pressures are inevitable, the ability to adapt will separate winners from losers: large enterprises with scale and supply chain control will consolidate market share, while SMEs must innovate, collaborate, or specialize to survive.
As the industry navigates this period of volatility, one thing is clear: the era of low-cost raw materials is temporarily on hold. Stakeholders who prioritize supply chain resilience, cost optimization, and strategic differentiation will be best positioned to weather the storm and emerge stronger. With careful planning and proactive adaptation, businesses can turn the challenge of rising prices into an opportunity to strengthen their competitive position in a reshaped market.
