FocusAsia EPDM prices seen flat in April on weak sentiment

21 March 2013 03:05  [Source: ICIS news]

By Helen Yan

EPDM is used in making gaskets and radiator hosesSINGAPORE (ICIS)--Asia’s ethylene propylene diene monomer (EPDM) prices are likely to remain flat in April because of weak demand and bearish market sentiment, industry sources said on Thursday.

EPDM producers’ efforts to hike offers by $100-200/tonne (€77-154/tonne) for April shipments have met with stiff resistance from buyers, industry sources said.

“We have proposed a $100/tonne price increase for April cargoes, but this has been rejected by our customers,” a northeast Asian EPDM producer said.

On 20 March, EPDM prices for the mediume ethylidene norbornene (ENB) grade, averaged $3,050/tonne CIF (cost, freight and insurance) China, according to ICIS.

EPDM prices have dropped by $300/tonne since early December 2012, when prices averaged $3,350/tonne CIF China, according to ICIS.

“Demand is weak and  market conditions are expected to be difficult in the second quarter, so buyers are pushing hard for lower prices,” an industry source said.

Chinese domestic EPDM prices were at yuan (CNY)26,000-27,000/tonne ($4,180-4,341/tonne) EXWH (ex-warehouse) this week, down by CNY2,000-3000/tonne from early December, according to Chemease, an ICIS service in China.

Oversupply of stocks has also pressured prices lower, with EPDM suppliers clearing their stocks at a discount prior to the new fiscal year in April, industry sources said.

“The suppliers have too much stocks at hand and the weak global auto industry is putting pressure on the EPDM prices to drop lower,” an industry source said.

EPDM is used for a wide range of products including gaskets, radiator hoses, and window seals in the automotive industry and roofing membrane and insulation material in the construction industry.

The weak global automotive industry has seen major car makers including General Motors, Ford Motors and Peugeot cutting production output at their factories in crisis-ridden Europe.

European car sales dropped 10% year over year in February, according to the European Automobile Manufacturers’ Association.

Registrations dropped to 829,359 vehicles last month from 923,553 in February 2012, the industry body said.

Overall, European auto sales have been in the doldrums for the past year, and are approaching 20-year lows.

Four of Europe’s five biggest auto markets saw declining sales last month, with Italy, Germany and Spain all reporting double-digit declines. UK sales increased 7.9%.

India, touted as a major emerging market for the automotive industry, has also seen declining sales.

Indian car sales slumped an annual 25.7% in February, the biggest fall in more than 12 years and the fourth consecutive monthly slide, according to the Society of Indian Automobile Manufacturers (SIAM).

Although China reported rising auto sales in the first two months of this year, industry players are adopting a cautious stance as to whether it will be reflected in the subsequent months.

Vehicle sales in China in January and February were up by 14.7% to 3.39m vehicles from the same period last year, according to the China Association of Automobile Manufacturers (CAAM).

“We will wait for March auto sales figures to get a clearer picture as the market sentiment is really weak in China,” a Chinese synthetic rubber producer said.

Synthetic rubber is used in the production of tyres for the automotive industry.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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