Asia LER prices may soften in the near term on China domestic prices

SINGAPORE (ICIS)–Asia liquid epoxy resins (LER) spot prices may soften in the near term in tandem with lower China domestic LER prices.

Suppliers are maintaining their offers at $2,950-3,050/tonne FOB (free on board) NE (northeast) Asia for January shipments.

Photo by Christian Handl/imageBROKER/REX/Shutterstock – A worker paints a church tower.

Asia LER spot prices rebounded on 2 January to $2,950-3,050/tonne FOB NE Asia, following three weeks of unchanged prices at $2,600-2,700/tonne FOB NE Asia.

Some suppliers were concerned that prices may not hold up amid softening demand for LER in the China market, ahead of the New Year holidays.

On 9 January, prices of LER in the domestic China market were at around yuan (CNY)26,500/tonne on a delivered (DEL) basis, compared with CNY26,500-28,000/tonne in the previous week.

“Domestic demand softened slightly because many buyers are well-covered with cargoes and do not need to procure any more till after the Lunar New Year in February,” explained one domestic producer.

Buyers in China had also been snapping up domestic cargoes last month in anticipation of tight supply.

While domestic prices are softening, domestic producers highlighted that they have no intention of exporting cargoes in the near-term as they can still achieve better netback in the domestic market.

Many domestic producers in China stopped exporting cargoes since July 2017 due to strong domestic demand for LER.

One domestic producer placed minimum workable offer for export cargoes originating from China at $3,370/tonne FOB (free on board) NE (northeast) Asia.

“Supply of LER remains tight but most buyers in southeast Asia have retreated to the sidelines amid softening demand in China,” said one northeast Asian producer in Mandarin.

The producer maintained offers at $2,950-3,050/tonne FOB NE Asia.

It added that buyers were scaling back their LER purchases in the week ended 9 January.

Another northeast Asian producer increased offers to $3,200/tonne FOB NE Asia.

“The discussion for cargoes into China has reduced compared to the last few weeks. But for other countries, it is quite active,” said the producer.

It sold around 400 tonnes of cargoes at $2,980-3,050/tonne FOB NE Asia into southeast Asia, Japan, Korea, Australia and New Zealand.

Meanwhile, producers also face cost pressures amid recent gains in feedstock epichlorohydrin (ECH) and bisphenol-A (BPA).

On 9 January, ECH prices were assessed firmer by ICIS at $2,200-2,250/tonne CFR (cost and freight) CMP (China Main Port).

ICIS assessed BPA prices higher at $1,650-1,680/tonne CFR China on 5 January.

“We are seeing our margins squeezed by higher feedstock costs. However, LER buyers are resisting further price increases,” said one northeast Asian producer.

Supply of LER remains tight in the near-term.Focus Article by Amy Tan