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.
If you would like to better understand how China's polyether polyol industry will absorb new supply beyond the 11 million t/y threshold, how exports may evolve, why margins are diverging across grades and how the competitive landscape may change over the next five years, please contact us for the full report and subscription details.