23 October 2012 15:43 [Source: ICIS news]
LONDON (ICIS)--European epoxy resins producers will target price increases in November because of shortages in the market caused by a recent force majeure at Momentive, sources said on Tuesday.
Two producers said they will target increases of €70-125/tonne ($90-162/tonne) in November, while a third producer said it will raise prices, but it declined to go into more detail.
"I think we are conservative with our targets, there are sellers out there that are asking for [an increase of] €200/tonne," an epoxy resins producer said.
Spot prices began to go up after US-based liquid epoxy resins (LER) producer Momentive declared force majeure on 10 October at its 100,000 tonne/year plant in Pernis, the Netherlands.
Production has now resumed, but it could take weeks to clear the backlog that built up during the past couple of weeks and during September, when Momentive had to keep its plant shut for three weeks instead of the 12 days it originally planned.
In addition to Momentive's force majeure and backlog problems, the market could be further tightened by a maintenance shutdown at Dow Chemical that is expected to take place in November for two weeks. Dow is set to shut its 70,000 tonne/year plant in Stade, Germany, to bring on line its new 30,000 tonne/year production line at the same location.
As a result, epoxy resin supply could become problematic, producers argued.
"The market is all over the place, people have been hammering on my door for material," a Middle Eastern producer said.
However, buyers said there has been no major disruption to supply, they are not worried and they can get what they need. And, as November and December are traditionally the slowest months of the year, buyers do not plan to purchase more than they need. On the contrary, they will sell surplus material they have in stock to improve their balance sheets.
"Demand for our products has been pretty weak and in fact I have more epoxy in storage than I need, so I might consider selling a truckload," a buyer said.
Because of the contradictory information from buyers and sellers it is unclear what direction prices will take in November. Negotiations are likely to begin next week.
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($1 = €0.77)
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