FocusAsia 2-EH offer at 23-month low; buyers insist on lower prices

18 November 2011 07:18  [Source: ICIS news]

By Quintella Koh

SINGAPORE (ICIS)--Offers for 2-ethylhexanol (2-EH) cargoes in east Asia this week hit a fresh 23-month low, with spot prices likely to continue falling as traders unload deep-sea cargoes, industry sources said Friday.

A large-scale northeast Asian buyer said it received an offer this week for a parcel of 2-EH European origin, scheduled for delivery on 10 December, at $1,450/tonne (€1,073/tonne) CFR (cost and freight) East Asia.

The last time cargoes were transacted at below $1,450/tonne CFR East Asia was on 22 January 2010, according to ICIS.

On 11 November, 2-EH CFR East Asia, which is subjected to import duty, was assessed at $1,460-1,500/tonne 22 January 2010, ICIS data shows.

The buyer of the bulk-sized 2-EH cargo from Europe said it is negotiating to purchase at $1,400/tonne CFR East Asia from the seller. The two parties have yet to agree on the volume of the transaction at the time of writing on Friday.

In the regional market, a Japanese trader said that it was prepared to offer Japanese-origin spot cargoes at $1,450/tonne CFR East Asia. The trader said that it is currently in negotiations with its customers for bulk-parcels of 1,000 tonnes.

Producers and traders polled on Friday said that continued weak demand from the downstream dioctyl phthalate (DOP) sector is placing strong downward pressure on Asian 2-EH spot prices.

DOP, a plasticiser, is added into polyvinyl chloride (PVC) to increase the flexibility of the polymer. PVC is used heavily in the construction sector for the manufacture of door frames, window frames and piping.

Fears of a property bubble that is developing in China, coupled with rising inflation in the country, is prompting many 2-EH buyers to adopt a very cautious stance.

Average home prices in the country's 100 major cities fell for the second consecutive month in October to yuan (CNY) 8,856/square metre ($1,395/square metre), down 0.23 percent from September, according to the latest report from the China Index Academy, the China Daily reported.

And price cuts in first-tier cities like Beijing and Shanghai are so much sharper that some property developers were even reported to be facing strong protests from existing homeowners. 

($1 = 0.74 / $1 = CNY6.35)

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

By: Quintella Koh
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