LONDON (ICIS)--European epichlorohydrin (ECH) contract prices rolled over from May to June, despite a slight increase in feedstock costs, as sellers sought to maintain volumes and combat increasing imports of relatively cheap material from Asia that have lengthened the market.
European ECH sellers indicated downward pricing pressure because of growing volumes of imported Asian material.
Most sellers said, however, that margins are very thin and prices have very little room to move lower, especially taking into account ongoing cost pressure from higher feedstock costs and the inability to pass on those costs.
“I would say [Europe is] balanced-to-tight, a healthy market. Now, the problem is in Asia, everything is oversupplied. They try to solve part of the problem with exports. Now other markets deteriorate too,” a seller said, summing up the market situation in Europe.
“June rollovers looks that way. Seeing some Korean imports, may put some downward pressure on pricing,” another seller said.
The majority of buyers confirmed that prices rolled over in June. One seller, however, reduced prices on contracts that saw price increases earlier in the year. A few buyers confirmed these reductions, though, they are not considered representative as they were designed to bring prices more in line with the market.
Looking ahead, most sources say they expect very few factors to impact pricing over the next couple of months. The summer holiday season in Europe is starting and is expected to reduce demand somewhat, but thin margins mean European ECH producer's prices are near the bottom, with little room for further reductions.
“Demand is stable, no peak this year. Prices expected to remain stable for the next 2 months,” a buyer said.