21 January 2009 09:20 [Source: ICIS news]
By Liu Xin
SINGAPORE (ICIS news)--Asian liquid epoxy resin (LER) prices fell 40% to its lowest level in 30 months and is poised to drop further on weak downstream demand and ample supply, buyers and sellers said on Wednesday.
Spot prices plunged $1,200/tonne (€930/tonne) from July last year to $1,800-1,900/tonne CFR (cost and freight) China, a level not seen since July 2006, according to global chemical market intelligence service ICIS pricing.
Some sellers said they were mulling further price cuts of as much as $100/tonne due to gloomy outlook. Most market participants do not expect a recovery in demand until after the Chinese lunar new year holidays next week.
"I have no idea about the bottom (of the market) in Asia as demand is so weak," said a northeast Asian trader. "Demand could improve after the holidays but it remains to be seen," he added.
"I don’t see LER picking up until the second half of February or March," a Chinese end-user said in Mandarin. "One thing for sure is that demand will not be as strong as in previous years given the current economic downturn," he added.
Plummeting raw material costs also exerted downward pressure on LER prices. Feedstock bisphenol A (BPA) hovered in the low $700s/tonne CFR NE (northeast) Asia after slumping over 60% since July 2008. Co-feedstock epichlorohydrin (ECH) prices also witnessed a similar price crash to around $850/tonne CFR China, the lowest level since July 2003.
"I think LER prices still have some ground to fall further considering the weak upstream prices," a Chinese buyer said. "We will delay our purchases until after the holidays."
Nevertheless, some sellers said that buying sentiment improved in tandem with rising Chinese domestic prices, and some buyers emerged to replenish their stocks ahead of the holidays.
Transactions in the Chinese domestic market saw a moderate increase of yuan (CNY) 500/tonne ($73/tonne) this week, following continuous price falls totaling more than CNY11,000/tonne in the past few months, traders said.
"The uptrend was mainly driven by tighter supply, but I don’t think it is sustainable," an eastern China-based trader said. Operating rates at local LER plants averaged below 50% due to poor economics.
"The LER market is still oversupplied," a northeast Asian producer acknowledged, "I see limited price upside, unless strong demand kicks in after the holidays," he added.
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