Polyether Polyols: Recent Market Intelligence Report

I. Price Dynamics
- Recent Price Trends: In early March 2026, the polyether polyols market experienced a rapid price surge. Accelerated by sharp increases in raw material prices during the latter half of the week, numerous polyether producers implemented order suspensions (i.e., 'book closures'). Among various grades, flexible foam polyether saw the smallest increase—at RMB 750/ton—while POP (polymer polyol) for flexible foams posted the largest gain—up to RMB 1,550/ton. By the end of the first week of March, propylene oxide (PO) rose by RMB 2,500/ton week-on-week; primary polyether feedstocks increased by RMB 1,000–1,500/ton compared to the prior week, with some high-end quotations exceeding RMB 11,000/ton. The annual average price for 2026 is projected to rise modestly to RMB 23,800/ton, up from RMB 23,200/ton in 2025.
- Drivers of Price Volatility: Heightened geopolitical uncertainty has triggered broad-based, sharp increases across commodity and multi-raw-material markets, plunging the spot market into a chaotic upward spiral. Significant supply uncertainty upstream—coupled with industry-wide suboptimal profitability—has intensified dual pricing drivers: cost-push pressures and supply-demand imbalances.

II. Supply-Demand Dynamics
- Supply Situation:
- Domestic capacity continues expanding, with total Chinese polyether polyol production capacity expected to reach 9.41 million tons by 2026. However, capacity utilization remains suboptimal, and overcapacity persists in lower-end segments.
- Effective April 1, 2026, VAT export tax rebates will be abolished for 249 products—including primary-shape polyethers—reducing the rebate rate from 13% to 0%. This policy shift significantly raises export costs, prompting manufacturers to rush production and fulfill export orders in Q1 2026, triggering a concentrated output surge.
- Demand Situation:
- China’s polyether polyol demand in 2025 is forecast at 1.5 million tons, up approximately 30.4% year-on-year from 1.15 million tons in 2024.
- Downstream applications are highly diversified, spanning new-energy vehicles (NEVs), building energy efficiency, adhesives, cold-chain logistics, and more. Key growth pillars over the next 3–5 years will be NEV-related demand, bedding upgrades driven by the 'sleep economy', and building insulation requirements under China’s 'dual-carbon' (carbon peak & neutrality) goals.

III. Import-Export Dynamics
- Export Situation:
- In 2025, China’s polyether polyol exports totaled 2.7605 million tons, representing a 28.14% YoY increase; the five-year average annual export growth rate stands at a robust 26%.
- Under the RCEP framework, tariffs on polyether polyols exported to ASEAN countries will be reduced to zero in 2026. Combined with newly commissioned footwear-material plants in Vietnam and Indonesia, this is expected to support export growth. Nevertheless, the elimination of export VAT rebates will raise export costs, weakening the international price competitiveness of Chinese polyether polyols—leading to a projected moderation or decline in total export volume in 2026.
- Import Situation:
- Import volumes remain relatively stable, dominated by high-end specialty grades. As domestic capacity expands and technological capabilities improve, import volumes have been trending downward.

IV. Industry Developments & Policy Impacts
- Industry Trends:
- The polyether polyol industry is undergoing profound transformation, with green and eco-friendly practices becoming mainstream. Low-VOC, high-performance environmentally sustainable polyether polyols are now the dominant product category.
- Digitalization and intelligent manufacturing are accelerating rapidly: automated production lines and smart factory technologies are enhancing both operational efficiency and product quality.
- Policy Impacts:
- The cancellation of export VAT rebates significantly affects the industry, compelling enterprises to adjust export strategies and mitigate rising cost pressures.
- Environmental regulations continue tightening—for example, the 'Guidelines for VOC Control in the Polyurethane Industry (Trial Version, 2025)' mandates that all newly constructed facilities install integrated RTO (Regenerative Thermal Oxidizer) incineration + condensate recovery systems. This substantially raises fixed investment thresholds per production line, curbing unregulated expansion by small- and medium-sized producers.

Analysis, Outlook & Forecast

I. Short-Term Price Outlook
- Driven jointly by rigid upstream cost inflation and an increasing share of high-value-added grades, polyether polyol prices are likely to remain elevated in the near term. However, attention should be paid to how geopolitical disruptions impact raw material supply continuity, as well as downstream industries’ tolerance for further price pass-through.

II. Medium-to-Long-Term Supply-Demand Outlook
- Supply Side: Domestic capacity will continue growing, but improving capacity utilization rates and optimizing product mix will become critical success factors. Lower-tier capacity may face phased-out consolidation, while advanced-capacity output will gradually ramp up.
- Demand Side: Robust growth in downstream sectors—especially NEVs and building energy efficiency—will sustain overall demand expansion. Concurrently, demand structure will evolve, with rising share of high-end, specialized products.

III. Import-Export Trend Outlook
- Export Market: Export volumes may face headwinds due to the VAT rebate cancellation and intensifying global competition. Yet RCEP tariff reductions and emerging-market demand growth will provide partial offsetting support.
- Import Market: With expanded domestic capacity and advancing technical proficiency, import volumes are expected to continue declining. Nonetheless, certain high-end and specialty-grade products may remain reliant on imports.

IV. Industry Development Trends Outlook
- Green & Eco-Friendly Transformation: Low-VOC, high-performance sustainable polyether polyols will become the mainstream product category. Enterprises must strengthen R&D and scale-up production of such environmentally compliant offerings.
- Intelligent & Digital Transformation: Widespread adoption of automated production lines and smart manufacturing technologies will boost productivity, enhance quality, and reduce costs. Firms must accelerate digital transformation to upgrade management systems and operational excellence.
- Global Competitive Landscape: Domestic and international players will compete comprehensively—across market share, technological innovation, and brand influence. Companies need to deepen international collaboration, expand overseas market presence, and elevate their global standing and strategic influence.