Soft Foam Polyether Market Dynamics Intelligence Analysis (May 27, 2026)

I. Recent Price Trends
- East China Market: As of May 19, the negotiated price range stood at RMB 8,600–9,000/ton (cash payment, delivered), with the low-tier segment at RMB 8,600–8,700/ton and the high-tier segment at RMB 8,800–9,000/ton.
- South China Market: As of May 19, the negotiated price range was RMB 8,500–8,900/ton (cash payment, delivered), representing a significant decline from RMB 9,000–9,400/ton on May 13.
- Shandong Market: As of May 19, the negotiated price range was RMB 8,800–9,200/ton (cash payment, delivered); for instance, Shandong Inovance New Materials quoted RMB 10,200/ton effective May 18—yet the overall market remains under downward pressure.
- Price Volatility: On May 13, the Shandong market price range stood at RMB 9,200–9,700/ton, down by RMB 300/ton (a 3–3.16% decline) from the previous day; the South China market price on May 13 was RMB 500/ton higher than that on May 19, indicating a rapid short-term price correction.

II. Market Drivers
1. Supply Side
- Capacity Expansion: Wanhua Chemical plans to commence construction in June and complete commissioning in October for its 262,000-ton/year polyether expansion project (including 400,000 tons/year vinyl polyether and 300,000 tons/year double-metal-catalyzed polyether), which will intensify supply-side pressure.
- Inventory Pressure: Some producers face mounting inventory burdens—for example, certain Shandong-based manufacturers offered discounted prices to stimulate orders on May 13, reflecting ample supply but insufficient demand traction.
- New Capacity Trial Production: Huayi Group’s newly commissioned production lines have further increased market supply volume.

2. Demand Side
- Weak Downstream Demand: Traditional downstream sectors—including sponge and furniture manufacturing—are entering their seasonal off-peak period, resulting in subdued purchasing sentiment and procurement strictly on an as-needed basis.
- Emerging-Demand Growth: Demand from emerging sectors such as new-energy vehicles (NEVs), wind power, and photovoltaics is rising; however, this growth has yet to fully offset the decline in traditional-sector demand.

3. Cost Side
- Propylene Oxide (PO) Prices: The primary raw material PO continues to weaken; on May 19, the ex-factory cash price in Shandong dropped to RMB 9,000/ton—down more than 10% from prior highs—eroding cost support for soft foam polyether.

4. Policy & Geopolitical Factors
- Export Tax Rebate Cancellation: Effective April 1, 2026, the 13% export tax rebate for polyether polyols was abolished—a near-term headwind for exports. Nevertheless, Wanhua Chemical retains strong export competitiveness due to its integrated upstream advantage (PO self-sufficiency exceeding 80%).
- Geopolitical Conflict: Escalating Middle Eastern tensions have disrupted global petrochemical supply chains; however, China—as the sole stable supplier—has seen substantial export growth (cumulative exports of 974,200 tons during Jan–Mar 2026, up 48.57% year-on-year).

III. Market Sentiment & Behavior
- Producer Strategies: Some producers are offering discounts to secure orders, yet high-end transactions remain difficult, resulting in a stalemate characterized by “converging low prices” and “challenging high-price realization.”
- Downstream Sentiment: Mid- and downstream enterprises are making modest replenishment purchases, but overall procurement remains cautious as buyers await clearer signs of price bottoming.
- Trader Behavior: Market sentiment is lukewarm, with participants generally adopting a neutral, wait-and-see stance and trading activity remaining subdued.

IV. Outlook
1. Short Term (1–2 months)
- Price Trend: Amid abundant supply, weak demand, and declining costs, soft foam polyether prices are expected to remain under pressure; the East China market may fall further into the RMB 8,500–8,800/ton range.
- Key Catalyst: Wanhua Chemical’s capacity expansion project commences construction in June, further amplifying supply-side pressure and potentially accelerating price declines.

2. Medium Term (3–6 months)
- Demand Recovery: With the arrival of the traditional high-demand “Golden September–Silver October” season, downstream order volumes are expected to gradually rebound, boosting market transaction activity.
- Price Rebound: Should PO prices stabilize on the cost side, soft foam polyether prices could recover to the RMB 9,000–9,500/ton range in September–October.

3. Long Term (1+ years)
- Supply-Demand Structure: Post-expansion, industry concentration will increase further, squeezing survival space for smaller players and fostering a more balanced, stable supply-demand structure.
- Price Benchmark: The long-term price equilibrium is likely to settle within RMB 8,500–9,500/ton, contingent upon PO price volatility and the pace of downstream demand recovery.

V. Risk Alerts
- Escalation of Geopolitical Conflict: Further intensification of Middle Eastern hostilities could disrupt global supply chains again, triggering sharp raw material price fluctuations.
- Demand Underperformance: Slower-than-expected growth in NEV, wind, and PV demand could prolong the industry’s downturn.
- Policy Changes: Adjustments to export policies or environmental regulations may impact enterprise costs and upset market supply-demand equilibrium.