Focus article by John Dietrich
HOUSTON (ICIS)--US September epoxy resin contracts were assessed lower on Tuesday, despite strong pressure for a rollover.
September contracts were assessed down 1 cent/lb ($22/tonne), putting them at $1.19-1.24/lb on a DEL bulk (delivered in bulk) basis.
Sources said domestic epoxy price declines were being accepted in the market starting in July and continuing into August.
Several buyers said they had pushed the declines in September, before Hurricane Harvey hit the US Gulf and caused tighter supply.
As a result, several buyers who had expected receiving declines in September said they were rolled over.
Other buyers said they were able to achieve declines of around 1-2 cents/lb ($22-44/tonne) in September contracts.
Most buyers in the US said their domestic contract price was down around 2 cents/lb compared with the June settlement of $1.20-1.25/lb.
A smaller portion of buyers said their domestic pricing was still flat compared with June.
The pressure for lower domestic contract pricing was coming from a decline in feedstock costs since late March and early April, and some slight softening in spot pricing.
Spot pricing is typically reflective of imported product, and several buyers and traders said that offer levels for product into the US fell 1-2 cents/lb from July through August.
This allowed most of the market to push for slight declines from domestic producers.
US epoxy producers said most contract pricing has held flat, but some declines have hit buyers on the upper side of the contract range.
Producers added that following intense supply tightness in September after Hurricane Harvey, as well as higher feedstock costs, any momentum for declines in September was erased, and all contracts were rolled over.
Supply remained tight throughout September, as even several plant restarts have allowed producers to increase operating rates to well below desired levels.
Additionally, imported volumes have declined throughout September, with stronger demand in Asia keeping more product from moving overseas.
A trader said that Asian sellers also firmed up offer levels in September by around 2-3 cents/lb, limiting US buyer leverage for domestic contracts.
Upstream feedstock availability remains tight, especially for bisphenol A (BPA), on production and logistic issues.
Epoxy demand was mostly steady to slightly stronger year on year in September, as much of the downstream consumption was not impacted by Harvey.
Major US epoxy resin producers include Hexion, Huntsman and Olin.
Image above: Epoxy resins are often used to make wind turbines. Source: Design Pics Inc/REX/Shutterstock?xml:namespace>