Asia EPDM seen flat-to-soft in Q1 on oversupply, weak demand

SINGAPORE (ICIS)–Spot prices of ethylene propylene diene monomer (EPDM) in Asia are likely to be flat-to-soft in the first quarter because of oversupply and weak buying sentiment, market sources said on Friday.

On 13 January, EPDM prices were assessed stable from the previous week at $1,900-2,000/tonne CFR (cost and freight) southeast (SE) Asia, ICIS data showed.

“There is too much supply and buying sentiment is weak with the crude oil price falling below $30/bbl and the global stock market rout,” a southeast Asia-based trader said.

The depreciation of the Chinese yuan and other Asian currencies against the US dollar has also further weighed on regional demand for EPDM, market sources said.

“The market is really quiet. There are few enquiries as customers are staying on the sidelines to wait for a clearer picture,” a supplier said.

“Customers are very cautious with the current market situation being so uncertain,” he added.

The upcoming Lunar New Year holiday, which is celebrated in most parts of northeast and southeast Asia, is also expected to crimp demand. In China, factories are expected to be shut for at least a week, market sources said.

Lunar New Year falls on 8 February and the Chinese market will be shut from 7-13 February for the holidays. South Korea, Taiwan, Malaysia, Singapore and Vietnam celebrate the holiday for a shorter period.

Asia’s EPDM market is oversupplied following the start-up of new plants in China and South Korea in recent years, market sources said.

These include Sinopec-Mitsui’s 70,000 tonne/year plant in Shanghai, SK Global Chemical’s 50,000 tonne/year plant in Ningbo, and Lanxess’s 160,000 tonne/year plant in Changzhou that came on stream in China between 2013-2015.

In South Korea, Kumho Polychem added a 50,000 tonne/year line at its Yeosu site in September 2015, bringing its total EPDM capacity to 220,000 tonne/year, making the company a major producer of the material in Asia.

A new EPDM plant is also expected to start up in the Middle East this year, thus adding more length to the market and downward pressure on prices, an Indian trader said.

The Middle East supplies EPDM to Asia, particularly to the Indian market.

On 13 January, EPDM prices were unchanged week on week at $1,800-1,900/tonne CFR India, according to ICIS.

EPDM is used in the automotive industry for the manufacture of door sealants, hoses, belots or anti-vibration parts. The product is also used in plastic modification, wire and cable, construction and oil additives.

Focus article by Helen Yan