Price and market trends: US epoxy resins contracts fall, and prices could decline further

24 May 2013 09:22  [Source: ICB]

US May domestic epoxy resins contract prices decreased 2.2% from April, and prices could move even lower going forward, sources said.

The decrease puts ICIS-assessed prices at $1.50-1.58/lb ($3,307-3,483/tonne, €2,546-2,682/tonne) on a DEL bulk (delivered in bulk) basis.

April prices were assessed at $1.52-1.63/lb DEL bulk after increasing by 14-18 cents/lb since the start of the year.

"We ended up with a very broad range of prices after all the increases," a producer said.

"It's not surprising to see a wide range now," the producer went on to add.

Originally, US producers had nominated a drop of 4 cents/lb for May contracts, save for one that nominated a rollover. That producer had also nominated a rollover in April as other producers sought price increases.

Buyers said price increases had been overdone, citing falling feedstock costs for benzene and propylene in the first quarter. Producers had argued that margins had been eroded, creating the need for higher prices.

Import prices fall
While US prices moved up, import pricing moved lower, which put pressure on domestic producers.

"There is a lot of downward on domestic pricing still to come," a buyer said.

"The arbitrage window with Asia is wide open," the buyer added.

Buyers said that importers and overseas producers were more concerned in April and May with gaining market share than pushing prices to their maximum.

"Spot material is the way to go," another buyer said. "We see epoxy prices continuing to fall."

The glut of less expensive imports has coupled with strong domestic operating rates to turn supply long. The demand side is mixed, with some sources saying orders are steady at best and others seeing growth.

"Demand is stable, but it will pick up in May and June," another producer said. "However, it is slower than in previous years."

Most of the softness is attributed to a weaker-than-expected construction market and slowing growth in the US automotive ­sector.

Major US epoxy resins producers include Dow Chemical, Huntsman and Momentive.

By: John Dietrich

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