10 January 2013 04:11 [Source: ICIS news]
By Helen Yan
SINGAPORE (ICIS)--India’s ethylene propylene diene monomer (EPDM) values may fall further as producers clearing their stocks are cutting offers to draw in buyers in a subdued market, industry sources said on Thursday.
For January shipments, offers to India were reduced by about $100/tonne (€77/tonne) as Asia continues to struggle with an oversupply of EPDM, they said.
Medium ethylidene norbornene (ENB) grade, which is actively traded in the spot EPDM market, fell to $2,900-3,100/tonne CFR (cost and freight) India on 9 January, down by $100-200/tonne from a month ago, according to ICIS.
“Discussions are ongoing but there is a big gap between buying and selling indications,” an Asian EPDM producer said.
Buyers want prices to fall further, quoting bids at below $2,900/tonne CFR India – about $200/tonne lower than current offers, market sources said.
“Supply is abundant and market conditions are expected to be difficult in the first quarter, so buyers are pushing hard for lower prices,” a trader said.
Adding to the woes of EPDM producers is the slowing Indian economy, which is weighing down on demand for the chemical.
The country is a major importer of EPDM, which is used in a wide range of applications including gaskets, radiator hoses, and window seals in the automotive industry, as well as roofing membrane and electrical insulation material in the construction industry.
India's spot EPDM prices are about $100-200/tonne lower than in other markets in Asia on account of the Indian rupee’s sharp depreciation against the US dollar because of weakness in the south Asian economy.
The rupee is trading at around Rs55 to the US dollar. It hit an all-time low of about Rs57 in June 2012.
High inflation, rising fuel costs, possible job losses, have dampened demand in India for cars, which is a major end-user of EPDM.
Car sales in the country is expected to grow at a much lower pace of 1-3% than initially expected for the year ending March 2013, according to the Society of Indian Automobile Manufacturers (SIAM). The previous car sales growth forecast was 10-12% for the period.
“Demand is currently weak but prices are near bottom as the excess supply is being absorbed and we expect buying interest to pick up towards the end of the first quarter,” a trader said.
($1 = €0.77)
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