16 October 2012 16:07 [Source: ICIS news]
LONDON (ICIS)--Lengthening supply conditions and weaker demand has made competition tougher in the European epichlorohydrin (ECH) market, sources said on Tuesday.
Figures released by Eurostat show that exports to countries that have not been traditional trading partners of European producers have spiked, which is the result of EU sellers looking for new markets.
For example, ECH exports from the EU27 to Russia have increased more than ten-fold, to 394 tonnes in July from 36 tonnes in January. Exports to Saudi Arabia from the EU27 have gone up from 299 tonnes in January to 1,091 tonnes in July.
"[My competitors are] very aggressive, and not only in Russia. The market is already long and I am afraid of what will come in November in December," an eastern European producer said.
Because Belgium-based Solvay opened an ECH plant in Thailand, it is now exporting less ECH to Asia, which has added to the length in the European market, sources said.
Solvay, the second largest ECH producer in Europe, opened a new 100,000 tonne/year ECH plant in Map Ta Phut, Rayong, Thailand, earlier this year.
Solvay used to export to Asia, but since the new plant started up, it has cut export volumes, a source at the company said. As a result, they are now looking for new markets to offload the volumes they used to export to Asia and this is making competition more fierce in Europe.
"It is an open secret: there has been tough competition in the market for quite some time, and everybody is looking to secure volumes in a long market," a source at Solvay said.
ECH sales are heavily dependent on demand from the downstream epoxy resins, construction and automotive industries, and because these industries have slowed significantly this year, ECH demand also dropped.
Most players said that the rest of the year will bring no improvement for the ECH market and it is unlikely the first quarter will be much better unless the EU's economic performance improves.
($1 = €0.77)
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