China ECH spot prices rebound after month-long decline

26 April 2012 09:38  [Source: ICIS news]

SINGAPORE (ICIS)--Spot epichlorohydrin (ECH) prices in China have bottomed out and rebounded over the past two weeks following a month-long decline, industry sources said on Thursday.

China’s ECH prices rose to yuan (CNY) 14,200-14,300/tonne ($2,250-2,266/tonne) delivered (DEL) east China in the first half of March on the back of firm feedstock prices, according to Chemease, an ICIS service in China.

However, the trajectory then took a sudden turn and plunged from mid-March. Besides the obvious gloomy downstream demand, some producers' deliberate control was another major contributing factor, market players said.

A leading ECH producer, Shandong Haili Chemical, slashed its offer from CNY 15,000/tonne to 11,300/tonne DEL on 13 April east China through 12 consecutive reductions within a month.

Such moves were an evident signal of the producer’s strategy, aiming at suppressing other ECH manufacturers, especially Wudi Xinyue Chemical, the second biggest producer which had reconverted its 65,000 tonne/year propylene oxide (PO) units back to ECH in March, market players said.

The major producer stopped reducing its offer and suspended taking orders last week starting mid-April. Market players said the reason might be that the producer had too many lower-priced orders to be fulfilled and an 80,000 tonne/year unit unexpectedly shut down due to a power plant problem.

Such news effectively eased the oversupply situation and stimulated some buying interest, another market player said.

Spot prices were steadily pushed up to CNY11,800-12,000/tonne DEL east China on Tuesday, data from Chemease showed.

Most market players expected a further increase in May, the market player said.

($1 = CNY6.31)

By: Victor Shi
+65 6780 4359

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