21 June 2013 09:59 [Source: ICB]
US domestic contract prices for June epoxy resins were assessed lower on 11 June, tracking cheaper feedstock costs and long supply.
US domestic prices were assessed lower by 2-3 cents/lb ($44-66/tonne, €33-50/tonne) as buyers and sellers confirmed contract settlements for material shipped in June. This put ICIS domestic epoxy resins prices at $1.47-1.56/lb, down from $1.50-1.58/lb for material shipped in May.
Sources said that producers had nominated a decline of 2 cents/lb for contract material and that this was widely accepted. However, market sources said some buyers have been getting better deals at the larger volume end of the spectrum, pushing the low end to fall by 3 cents/lb.
Although demand has been steady to slightly softer and supply is long, market sources said the biggest reason for the price decline was feedstock costs. "There's enough supply out there for everyone, so supply/demand isn't an issue," a buyer said. "The market is focused on feedstock costs."
Feedstock benzene and propylene costs usually take one to two months to filter down to the epoxy resin level. A producer said the feedstock model makes the most sense for it as seller margins improved in the first part of the year.
"We finally got margins back to an acceptable level," the producer said. "Now we need to protect them, and feedstocks are the biggest threat there."
The producer added that continued competition from less expensive imports is a concern but has probably hit its high point.
"They don't really have any lower they can go," the producer said. "They're almost selling at feedstock cost."
OUTPACED BY SUPPLY
Market players agreed that the large volume of imported material, coupled with strong domestic operating rates, is keeping the market long. "Demand is definitely being outpaced by supply," a buyer said. "What you need is out there."
Demand is not strong enough to absorb the extra material, sources said, although most of the concern is aimed at growth rates rather than total sales. "We're not celebrating our sales or anything, but we're not having to chase orders," the producer said.
Major US producers of epoxy resins include Dow Chemical, Huntsman and Momentive.
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