China’s Feb ECH imports fall on lower domestic prices, ample supply

03 April 2014 05:34 Source:ICIS News

SINGAPORE (ICIS)--China’s imports of epichlorohydrin (ECH) fell sharply in February from the previous month because of ample availability of lower-priced domestic cargoes, market sources said on Thursday.

The country imported 2,607 tonnes of ECH in February, a 1% year-on-year drop and a 35% decline from January, data from China Customs showed.

Domestic ECH prices on a DEL (delivered) east China bulk basis in the week ended 1 April have declined by 11% from a 14-month high of around yuan (CNY) 11,400/tonne ($1,839/tonne) in end-December last year, according to ICIS data.

Major producers had slashed prices to move cargoes due to a build-up in inventory after most downstream epoxy resins plants were shut for 1-2 weeks for the Lunar New Year holiday from end-January to early February.

Since mid-March this year, domestic prices for bulk material have stabilised at an average of CNY10,250/tonne DEL east China, ICIS data showed, following reduced supply. A major producer’s plant was shut for regular maintenance from mid-March until mid-April. This helped offset the relatively stable but weak demand from the downstream epoxy resins sector.  

Imports to China would likely continue to be limited if domestic prices were to stay below the CNY10,400/tonne level, which is the estimated import-parity equivalent to current import prices, market participants said.

The import-parity price takes into account a 17% value added tax (VAT) and 5% rebate for ECH that is used in the production of epoxy resins for export sales, market participants added.

Import prices on 1 April were at an average of $1,605/tonne CFR (cost & freight) CMP (China Main Port), according to ICIS data.

($1 = CNY6.20)

By Matthew Chong