FocusChina ECH falls $286/t on soft demand

09 April 2008 10:10  [Source: ICIS news]

By Liu Xin

SINGAPORE (ICIS news)--Epichlorohydrin (ECH) prices in China have declined by about 12% or yuan (CNY)2000/tonne ($286/tonne) over four consecutive weeks on weak buying sentiment and abundant local supply, market sources said on Wednesday.

ECH was pegged at CNY14,000-14,500/tonne DEL (delivered) east China this week according to global chemical market intelligence service ICIS pricing.

Strong price competition among local producers also weighed on the market sentiment, traders said, adding that some major local producers had drastically cut offers by around CNY1,500/tonne over the past few weeks to CNY14,500-15,000/tonne in a bid to liquidate cargoes.

Nevertheless, some traders said that offers above CNY14,500/tonne DEL east China failed to attract buying interest, as competitively-priced material was readily available.

The bulk of deals were heard done at around CNY14,000/tonne DEL, although market talk emerged of unconfirmed, cheaper material available at below CNY14,000/tonne DEL.

One major local producer said that inventories in China were high due to the weak uptake from derivative markets. Operating rates at downstream epoxy resins plants were said to be around 50-70%.

Buying sentiment remained cautious amid the market downtrend and one east China-based trader said that end-users were largely staying on the sidelines in anticipation of further price declines in the weeks ahead.

However, some regional suppliers doubted if there was any room for a further fall in prices, as production margins of Chinese ECH producers had been squeezed recently.

In view of falling Chinese ECH values, most regional suppliers were not keen to export to China, sources said. 

Notional selling ideas for regional iso-tank cargoes that carried anti-dumping duties of around 4% were pegged at $1,950-1,980/tonne CFR China main port (CMP), traders said, adding that trades were thin owing to bearish buying sentiment for imports.

The outlook was mixed with some traders said that prices were still under downward pressure as demand showed no signs of improvement in an amply-supplied market.

Other traders were more optimistic about the near term price outlook, as they expected an upcoming turnaround at Baling Petrochemical to help bolster domestic ECH numbers.

Epoxy resins prices dropped CNY500/tonne from last week to CNY25,000-25,500/tonne DEL east China this week, in line with falling raw material ECH and bis-phenol A (BPA) prices, traders said.

Baling Petrochemical planned to shut down its 32,000 tonne/year ECH facility for a 5-7 day turnaround in the second half of April, a source close to the company said.

($1 = CNY7)

For more on ECH, BPA visit ICIS chemical intelligence

By: Liu Xin
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