Asian ECH projects will lengthen Europe market, pressure prices

17 September 2013 16:17  [Source: ICIS news]

ICIS (LONDON)--European epichlorohydrin (ECH) prices could drop in October because the market is long and imports might increase as a result of new plants starting up in Asia, a market source said on Tuesday. 

According to a European producer, manufacturers in Europe might have to drop prices if they want to maintain their market share, or at least avoid increasing prices if they do not want to lose volumes to Asian suppliers. 

"Margins will continue to erode in Europe, but [producers] will have to lower prices to maintain market share," the producer said.

Buyers agreed, adding that although feedstock propylene prices have increased in the past couple of months, it is unlikely producers will be able to pass the hikes on, as the market is long and consumers can use imports as leverage. 

Two buyers have already been approached by distributors in Europe offering Korean and Chinese ECH at lower-than-European prices. To one buyer this was a sign that Asian sellers are becoming more active and are keen to shift volumes to Europe, even if they have to offer lower prices. 

European September ECH prices are at €1,710-1,720/tonne ($2,280-2,293/tonne) FD (free delivered) NWE (northwest Europe).

According to ICIS data, there are eight plants in Asia under construction or in the planning process which could add an extra 630,000 tonnes of ECH to the global market by 2015 (see table below).

This could lead to further lengthening in the market if demand from the downstream epoxy resins sector, which is also expanding in Asia, does not pick up. 

Company

Region

Capacity (tonnes/year)

Expected

Status

ABT

Jiangsu, China

100,000

H2 2014

Construction
underway

Chang Chun
Petrochemical Co

Liaoning, China

160,000

 n/a

Planned

Fujian Haobang Chemical

Fujian, China

20,000

 n/a

Study

Fujian Haobang Chemical

Fujian, China

30,000

 n/a

Study

Samsung Fine
Chemicals Co

Ulsan, South Korea

60,000

Online, September 2013

Online

Shandong Dahai
Group Co

Shandong, China

60,000

n/a

Study

Solvay Chemicals
(Shanghai)

Jiangsu, China

100,000

June/July 2014

Planned

Tangshan Risun Chemical

Hebei, China

100,000

n/a

Planned

($1 = €0.75) 


By: Janos Gal
+44 208 652 3214



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