FocusS Korea to export more liquid epoxy resins to EU on trade pact

11 July 2011 07:35  [Source: ICIS news]

By Gabriel Yip

SINGAPORE (ICIS)--South Korean producers of liquid epoxy resins (LERs) are looking at exporting more volumes to Europe, as shipments to the region now enjoy zero tariffs, industry sources said on Monday.

LER is among an array of goods on which import duties will be removed under a free trade agreement (FTA) between South Korea and the European Union (EU) that took effect on 1 July.

Prior to the FTA’s implementation, the EU charges a 6.5% import duty on South Korean LERs.

The trade pact with EU may just rev up the current lacklustre export market for South Korean LERs, said a source from a Korean producer.

The producer will begin discussions with EU buyers in the next week or so, said the source.

Spot LER prices in Asia have been falling, weighed down by easing feedstock prices and weak demand in China, market sources said.

LER prices settled at $3,150-3,250/tonne (€2,205-2,275/tonne) FOB (free on board) NE (northeast) Asia (iso-tank) on 5 July, down by $100/tonne week on week, according to ICIS.

At around the same period, epoxy resins feedstocks epichlorohydrin (ECH) lost $20/tonne to $1,880-2,050/tonne CFR China Main Port (iso-tank), while another feedstock bisphenol A (BPA) slipped $30/tonne to$2000-2030/tonne CFR NE Asia, ICIS’ data showed.

Chinese buyers of epoxy resins are facing financial constraints in view of rising cost of funds as the Chinese government is aggressively reining in credits via hikes in interest rates.

With the FTA with EU, South Korean LER makers are presented with an alternative export market, where they will be able to compete directly with domestic producers.

In Europe, meanwhile, LER prices are also on a decline because there is sufficient supplies.

Spot LER prices in the EU are currently quoted at €2,800/tonne FD (free delivery) NWE (northwest Europe).

Epoxy resins are polymers used to manufacture adhesives, coatings, paints and structural parts used in the automotive, aerospace and aircraft industries.

($1 = €0.70)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Gabriel Yip
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