Compounded by Multiple Factors, Ethylene Oxide Prices Underwent Sharp Correction in May

Ethylene oxide prices declined in might 2026. According to data from SunSirs, as of might 22, the average price in the domestic ethylene oxide market stood at 7,600 RMB/ton—a decrease of 15.56% compared to the average market price of 9,000 RMB/ton recorded at the beginning of the month (might 1).

On might 22, 2026, the prevailing market price to ethylene oxide in the East China region was set at 7,600 RMB/ton; listed prices in the South China market ranged from 7,500 to 7,600 RMB/ton; listed prices in the North China market stood at 7,500 RMB/ton; and listed prices in the Central China market were set at 7,750 RMB/ton.

Analysis of the Sharp Correction in Ethylene Oxide Prices in might 2026

I. Cost Side: Geopolitical Premiums Receded, Ethylene Prices Experienced a Precipitous Decline

Approximately 70% of the production cost to Ethylene Oxide (EO) is derived from ethylene, the price of which is highly correlated with crude oil. In the early hours of might 22, a draft agreement between the U.S. and Iran was reached; as geopolitical risks in the Middle East subsequently eased, Brent crude oil prices plummeted by over 6% within the day. This triggered a rapid decline in ethylene prices, as the risk premium—previously inflated by geopolitical conflicts—was rapidly squeezed out, causing the cost support to EO to collapse completely. Throughout April, ethylene prices remained at elevated levels, and EO manufacturers demonstrated a strong resolve to maintain their pricing; however, entering might, abundant ethylene supplies and continuously softening prices deprived EO of its cost-based floor, leading to a passive yet steep downward adjustment in its market price.

II. Supply Side: Maintenance Fell Short of Expectations; Inventory Pressure Gradually Emerged

In might, several domestic EO production units were scheduled to maintenance; however, the actual reduction in operating loads was limited, and the sector's operating rate remained above 53%. Consequently, the overall contraction in supply fell short of market expectations. Driven by previously high price levels, manufacturers demonstrated an increased willingness to ship goods; this factor—combined with production shutdowns among downstream consumers during the might Day holiday—resulted in a backlog of inventory. As the pressure of accumulating stock gradually intensified, producers were compelled to reduce prices in order to clear their inventory.

III. Demand Side: Traditional Off-Season + Downstream Weakness; Essential Demand Continued to Contract

might marks the traditional off-season to EO demand. Operating rates in downstream sectors—such as polycarboxylate superplasticizers and surfactants—have declined. Compounding this situation, the recovery of the real estate market has fallen short of expectations, and end-market orders remain dismal. Consequently, downstream buyers are resistant to high raw material prices and are limiting their purchases strictly to immediate necessities. Related industries, such as polyester and textiles, have simultaneously weakened, indirectly dragging down EO demand. Market participants are adopting a strong wait-and-see stance, and buying interest is severely lacking, creating a negative feedback loop characterized by the cycle: "weak demand → price cuts → renewed wait-and-see."

IV. Capital and Sentiment: High-Level Profit-Taking and Self-Reinforcing Decline

From March to April, driven by geopolitical conflicts, EO prices surged from 5,500 RMB/ton to 9,000 RMB/ton, accumulating a substantial volume of profitable positions. In might, as expectations of geopolitical de-escalation materialized, capital rapidly exited the market en masse. This direction was compounded by a breakdown in cost support and a pessimistic demand outlook, causing market sentiment to shift abruptly; traders responded with panic selling and price cuts, further amplifying the magnitude of the decline.