OUTLOOK ’18: Asia liquid epoxy resins prices to rise on tight supply

Source: ICIS News


SINGAPORE (ICIS)--Asia's liquid epoxy resins (LER) spot prices are likely to see upward pressure in early parts of 2018 due to limited spot supply.

In December 2017, key producers in northeast Asia were sold out of cargoes by the first week of the month.

December shipment cargoes transacted at an average of $2,650/tonne FOB (free on board) northeast (NE) Asia.

Market participants highlighted that prices could have edged up further if producers had more spot availability.

“I was trying to divert some cargoes from our Europe and US plants to sell into China and southeast Asia but as we have some contractual commitments, I did not manage to get more cargoes to sell into the region,” said one northeast Asian producer.

The producer added that it was in discussions in early December with buyers in southeast Asia, with offers at $2,800/tonne FOB NE Asia, but these did not materialise into deals as it did not have cargoes.

Epoxy resins are a family of synthetic resins, comprising products ranging from viscous liquids to high melting point solids. They are used in a wide range of downstream sectors, from automotive and industrial paints, electrical laminates to linings for storage tanks.

Demand for epoxy resins was largely subdued in 2017.

In December, demand picked up as buyers based in southeast Asia and China were stockpiling cargoes in anticipation of tight supply and further feedstock gains.

“I have had to stop entertaining enquiries because I have no cargoes left. Typically, demand is weaker in December because most buyers in Asia want to maintain lean inventories at the end of the financial year. This time around, they are active in the market because there is not much spot cargo availability,” said one northeast Asian producer in Mandarin.

Buyers in China have been actively importing cargoes since the middle of the year.

“The Chinese market is usually self-sufficient. However, due to stricter environmental regulations introduced by the Chinese government, many LER plants have shut,” one China-based producer said in Mandarin.

“There is no indication when these plants will restart. The remaining plants are all running at full capacity and now we do not even need to export LER because of strong domestic demand,” the producer added.

On 19 December, domestic deals in China were concluded at around Chinese yuan (CNY) 28,000/tonne DEL (delivered) East China.

In the near term, supply of LER is expected to remain tight.

A pick-up in re-stocking activities is expected in January ahead of the Lunar New Year holiday which falls in mid-February 2018.

“We are receiving enquiries for January cargoes, but because we are sold out of December shipment cargoes, we prefer to monitor the market before discussing January allocations,” said one northeast Asian producer.