FocusChina’s ECH import outlook uncertain amid wide buy-sell gap

28 June 2012 08:53  [Source: ICIS news]

By Jasmine Khoo

China’s ECH import outlook uncertain amid wide buy-sell gap SINGAPORE (ICIS)--China’s epichlorohydrin (ECH) import players have been thrown into uncertainty about the market outlook following a persistently wide gap between buying and selling ideas, market sources said on Thursday.

China’s ECH spot prices tracked key producer Shandong Haili Chemical’s offers, which fell from yuan (CNY) 12,400/tonne ($1,950/tonne) DEL (delivered) east China on 15 May to CNY10,300/tonne DEL east China on 26 June.

The producer quoted falling domestic feedstock propylene costs and weak downstream demand as reasons for the decrease in prices, market participants said.  

Shandong Haili Chemical declined to comment.

The decline in Chinese domestic ECH prices has caught the regional sellers outside of China by surprise, leaving many producers and traders uncertain about the Chinese import market situation in the near future.

The majority of these producers and traders were unwilling to drop their offers and want to sell the material at $1,850/tonne CFR (cost & freight) China Main Port (CMP) and above, mainly due to feedstock propylene cost pressure.

Propylene prices in northeast Asia were largely stable at $1,230-1,270/tonne CFR northeast (NE) Asia on 22 June from $1,230-1,305/tonne CFR NE Asia four weeks ago, according to ICIS data.

Most of these ECH sellers have turned their attention away from the China import market to other regional and global import markets such as southeast Asia, India, the Middle East and even South America, market participants said.

‘It is very hard to sell into China right now,’ said a northeast Asia-based ECH manufacturer, adding that it has not offered any cargoes to China for two weeks.

Transactions for cargoes going into China have been limited, with only three deals fixed by a regional producer this week for the first time in eight weeks.

The deals were done at $1,800/tonne CFR China for June-loading cargoes of 100, 300 and 400 tonnes, according to the regional producer.

‘[The price of] $1,800/tonne CFR China price is too low,’ said another northeast Asia-based producer, adding that this price level will compromise its profit margins and sales targets. Other producers voiced similar sentiments and maintained their offers at above $1,850/tonne CFR China.

Meanwhile, ECH import data from China Customs showed that 10 out of 16 ECH importers in April stopped importing ECH in May.

These 10 companies imported approximately 2,160 tonnes of ECH in April, the data showed.

In addition, the companies that continued to import ECH in May reduced their import volumes, according to the data.

China imported around 10,630 tonnes of ECH in April, but only around 2,600 tonnes in May, the data showed.

With the Chinese domestic ECH price downtrend showing no signs of rebound, the Chinese import market activity is likely to remain subdued for the time being, according to industry sources.

($1 = CNY6.36)

By: Jasmine Khoo
+65 6780 4359

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