Gap shrinks between US epoxy contract, spot prices

20 August 2013 21:26  [Source: ICIS news]

HOUSTON (ICIS)--The gap between US domestic epoxy resin prices and overseas material is narrowing because US producers are seeking to regain market share, sources said on Tuesday.

August domestic contracts were assessed lower by 6 cents/lb ($132/tonne, €99/tonne) a week ago, putting prices at $1.38-1.46/lb on a DEL (delivered) bulk basis.

Sources said spot prices have fallen by 2 cents/lb since then, down to $1.33-1.38/lb DEL bulk.

“Buyers are trying to talk up the idea that prices could go lower or should go lower,” a trader said. “But there’s no room for imports to go down.”

The 5-8 cent/lb gap is the lowest it has been since the spring, when imports were 5-6 cents/lb lower than domestic material.

The narrowing of the gap is largely tied to US producers seeking to reclaim market share after they pushed prices up by 15-16 cents/lb in the summer to restore margins.

“At some point in time the low volumes will outweigh the high margins,” a buyer said. “Domestic producers are coming to the table with offers comparable to overseas sellers.”

Since reaching a high in May, US domestic epoxy resin prices have fallen back to spring levels.

However, overseas material has fallen by 4-5 cents/lb since then, allowing it to increase its market share in the US.

Market players said that overseas prices are unlikely to fall further without aid from feedstocks dropping in Asia and Europe.

“None of the importers are making a lot of money or margins,” another trader said.

However, recent increases in US feedstock costs for propylene and benzene could push domestic producers to seek price increases or rollovers, which would allow imports to maintain their pricing advantage.

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

($1 = €0.75)

By: John Dietrich

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