Capacity Tops 11 Million t/y, but Margins Diverge: A New Phase for China’s Polyether Market?

October 12, 2026 6 min read

No mention of operating rates! Editor

Expansion continues and exports remain important, while product mix and cost control become the new dividing lines

In 2026, China’s polyether polyol (PPG) industry continues to expand, but the most important issue is no longer simply “how much capacity has been added.” Under the current statistical methodology, China’s polyether polyol capacity increased from 10.569 million t/y in 2025 to 11.209 million t/y in 2026, up about 6.1%. Meanwhile, China exported approximately 1.773 million tonnes of polyether polyols in Jan–Jul, up 14.6% year on year, while imports fell to around 0.124 million tonnes, down 29.5%. Supply capability continued to expand and exports remained an important outlet for domestic supply, while the price level was also significantly higher than last year. By the end of September, 2026 average prices for six mainstream grades—flexible foam, high-resilience, CASE, rigid foam, conventional POP and high-resilience POP—were about 21%–27% above their full-year 2025 averages. However, higher prices did not translate into improved margins for every product, and structural divergence in China’s polyether polyol market became increasingly pronounced.

Figure 1 Key Data for China’s Polyether Polyol Market in 2026

Expansion Has Not Ended Above 11 Million t/y

At the company level, China’s polyether polyol capacity posted a net increase of about 0.64 million t/y in 2026. New capacity or capacity adjustments were recorded at Changhua Chemical, Guangxi Huayi, Guangxi Tongkun, Shandong Longhua and other producers, while effective capacity at certain companies was restated based on actual plant conditions. The 11.209 million t/y total is therefore not a simple sum of all newly built projects; it reflects new units, revamps and adjustments to existing capacity. More importantly, the project pipeline remains substantial. Based on projects currently tracked, planned or proposed projects for 2027 alone already exceed 1.40 million t/y, involving Changhua, Wudi Dexin, Befar, INOV, Sinochem Dongda, Huajin United Petrochemical and others. Although the eventual start-up dates of some projects remain uncertain, one point is clear: supply-side competition has not ended. The industry’s focus will gradually shift from whether new supply is coming to how that supply can be absorbed by the market.

Figure 2 China Polyether Polyol Capacity Changes and the Project Pipeline

Exports Are Still Growing, but the In-Year Pattern Has Shifted

Overseas markets remain an important outlet for China’s polyether polyol supply. In Jan–Jul 2026, China exported approximately 1.773 million tonnes, up 14.6% year on year; imports were about 0.124 million tonnes, down 29.5%, further strengthening the market’s net-export position. However, export growth was not evenly distributed through the year. Shipments reached a clear high of about 0.422 million tonnes in March, then fell rapidly to around 0.190 million tonnes in April. From May through July, monthly volumes broadly returned to the 0.18–0.22 million tonne range. In other words, exports showed a clear pattern of front-loaded release followed by a return to more normal levels.

China’s overseas polyether polyol flows also remained geographically diversified. In Jan–Aug, India was the largest single destination at about 0.238 million tonnes, followed by Türkiye at approximately 0.191 million tonnes and Vietnam at around 0.149 million tonnes. Indonesia, Russia, Brazil and Mexico also maintained meaningful volumes. As domestic supply capability continues to expand, the key question is no longer simply whether exports can keep growing, but how different overseas markets can absorb incremental Chinese supply in terms of price, timing and product mix.

Figure 3 China Polyether Polyol Export Pattern and Major Destinations in 2026

Prices Moved Higher Across the Board, but Not Every Grade Earned More

The price level of mainstream polyether polyol products rose markedly from last year. By the end of September, the average price of flexible foam polyether was about RMB 9,847/mt, up around 26% from the full-year 2025 average; high-resilience polyether averaged about RMB 10,319/mt, up 25%; CASE polyether averaged approximately RMB 10,302/mt, up 27%; and rigid foam polyether averaged around RMB 9,849/mt, up 21%. Conventional POP and high-resilience POP averaged roughly RMB 10,501/mt and RMB 10,854/mt, respectively, representing increases of about 24% and 21% from their 2025 averages.

During the year, polyether polyol prices remained closely linked to upstream propylene oxide (PO) costs. In March and April, crude oil, propylene and PO costs rose rapidly, lifting prices across the major polyether polyol grades. In the second quarter, PO prices retreated and the pass-through of high prices to end users encountered resistance, prompting a broader market correction. In August and September, the market strengthened again as PO moved higher. Overall, price changes in 2026 still showed a clear cost-driven pattern, but the ability to pass through those costs increasingly differed by product.

Figure 4 Average Prices for Major Polyether Polyol Grades in 2025 and Jan–Sep 2026

Margins, Not Selling Prices, Are Creating the Real Divide

Judging by selling prices alone, 2026 might appear to be a broadly improved year for the polyether polyol industry. Once feedstock costs are included, however, profitability diverges sharply across products. Based on the current cost model, the Jan–Sep average theoretical margin was approximately RMB 612/mt for rigid foam polyether, RMB 599/mt for conventional POP and RMB 494/mt for high-resilience polyether. These grades delivered relatively stronger results; high-resilience and rigid foam polyether remained profitable in all nine months covered by the current statistics.

By contrast, flexible foam polyether recorded an average theoretical margin of about RMB -43/mt in Jan–Sep and was profitable in only three months; CASE polyether remained close to break-even; and high-resilience POP faced the greatest pressure, with an average theoretical margin of approximately RMB -576/mt and positive margins in only two of the nine months. Although all these products were exposed to the same increase in PO costs, differences in formulation, other feedstock costs, consumption ratios and price pass-through capability produced very different outcomes. Rising polyether polyol prices therefore do not necessarily mean that producers can improve margins at the same pace. As capacity continues to expand, product structure is becoming an increasingly important dividing line in profitability.

Figure 5 Theoretical Margins for Major Polyether Polyol Grades in Jan–Sep 2026

Beyond 2026, Where Will the New Supply Go

Overall, China’s polyether polyol market in 2026 is moving from a relatively simple phase of scale expansion into a more complex period of structural competition. Capacity has already exceeded 11 million t/y and a sizeable project pipeline remains. Exports are continuing to shoulder an important supply-absorption role, but monthly shipment patterns and the performance of individual destination markets are changing. At the same time, prices for major polyether polyol grades have risen sharply, without delivering synchronized margin improvement across all products.

This means that the next stage of industry competition will no longer be defined by capacity alone. Product mix, feedstock and cost-management capability, plant operating efficiency, customer structure and overseas market development will jointly determine whether new capacity can be converted into stable sales and sustainable profits. For China’s polyether polyol industry, the key question is no longer simply “how much capacity is there,” but where incremental supply will flow and which products can generate sustainable margins.

Figure 6 Initial Assessment of China’s Polyether Polyol Market in 2026

PUdaily’s 2026 Asia-Pacific PPG Industry Landscape and Trend Outlook Report will focus on the China market and provide a detailed review of polyether polyol capacity, major producers, imports and exports, prices, costs and margins, and downstream consumption. Drawing on announced and proposed projects, the report will also forecast the supply-demand structure and market trends in China and the broader Asia-Pacific region for 2027–2031.

https://www.pudaily.com/news/67358/capacity-tops-11-million-ty-but-margins-diverge-a-new-phase-for-chinas-polyether