European May ECH likely to rollover

06 May 2014 20:08  [Source: ICIS news]

LONDON (ICIS)--European epichlorohydrin (ECH) May contract prices are likely to rollover from April, despite slightly higher feedstock costs and growing demand, as the market is long and producers are looking to maintain market share rather than lift prices at the risk of losing volume.

Propylene costs in May rose €10/tonne, meaning that at a traditional 0.7 times cost pass through to ECH, ECH prices should rise by about €7/tonne in May.

Although European ECH producers said that demand is growing month-on-month, they expect May contract prices to roll over, due to the long market.

“May is not settled yet, a rollover wouldn’t surprise me. Demand is pretty good, every month seems to be better than the previous month,” a seller said.

One seller said that margins are unsustainably thin, driven by oversupply in Asia, where the ECH is used to make epoxy resins which are shipped to Europe, competing with domestic European ECH and epoxy resins.

A distributor also expects prices to roll over in May, saying it has only heard offers for rollovers, which it attributed to an oversupplied market.

A buyer said it has received May offers for rollovers from European and Korean suppliers amid stable demand from April.

“So demand is stable, prices are stable,” a buyer said.

By: Iain Packham

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