SINGAPORE (ICIS)--Asia liquid epoxy resins (LER) spot prices are likely to continue on an uptrend on feedstock gains and strong demand from China.
In the week ended 17 October, prices were assessed at an average of $2,215/tonne FOB (free on board) NE (northeast) Asia, up $150/tonne from an average of $2,065/tonne FOB NE Asia on 10 October.
LER producers have been increasing spot offers for October and November cargoes amid recent gains in feedstock epichlorhydrin (ECH) and bisphenol-A (BPA) prices.
On 17 October, ICIS assessed ECH prices at $1,400-1,500/tonne CFR (cost and freight) CMP (China Main Ports).
Meanwhile, BPA prices were assessed at $1,190-1,250/tonne CFR China on 13 October.
“Buyers were generally resistant to price increases because they thought demand for LER is weak. What they were not expecting is strong demand from the China domestic market,” one northeast Asian producer said in Mandarin.
Industry sources observed that domestic demand in China is strong amid current tight supply.
Since the start of this year, several LER plants in China were forced to shut for not meeting the country’s environmental regulations. It is not clear whether these plants will restart any time soon.
Some industry sources are hopeful that China will ease regulations after the 19th National Congress of the Communist Party of China in October.
Regardless, supply of LER in the domestic China market is expected to remain tight till November.
Most domestic producers said they were not keen to export cargoes since domestic LER prices are likely to continue to climb.
On 17 October, LER transacted at CNY19,500-20,100/tonne on a delivered (DEL) basis in the domestic China spot market compared with CNY19,000-19,300/tonne in the previous week.
“I have not exported LER for more than three months thanks to strong domestic demand. I will only consider exporting if buyers outside China bid at around $2,400-2,500/tonne FOB NE Asia,” said one domestic producer in Mandarin.
The producer added that it had previously exported cargoes to buyers in Europe and the US.
However, buying indication from buyers in these regions is only around $1,950-1,980/tonne FOB NE Asia.
Meanwhile, northeast Asian producers outside China have also noted a spike in the number of enquiries from buyers based in China.
Some of these enquiries were from domestic producers in China.
These producers were said to be running their LER plants at full capacity but were trying to procure spot import cargoes for sale in the domestic market.
Against this backdrop, buyers based in southeast Asia and Japan were stockpiling cargoes in the week ended 17 October in anticipation of further price increases and tightening supply.
“I was actually surprised that buyers in southeast Asia and Japan accepted the higher offers after rejecting the higher offers since the start of October. One buyer told me that he knows that if he doesn’t buy LER now, chances are prices will increase again,” said one northeast Asian producer in Mandarin.
On 17 October, 500 tonnes of LER was sold into Japan at $2,150/tonne FOB NE Asia while 300 tonnes of LER transacted in southeast Asia at $2,280/tonne FOB NE Asia.
Focus article by Amy Tan
(Tops image: Industrial paints: Photographer: Michaela Begsteiger / imageBROKER/REX/Shutterstock)