AFPM ’19: US epoxy steady-to-soft as players monitor feedstocks, peak demand

HOUSTON (ICIS)–US epoxy is steady-to-soft heading into this year’s International Petrochemical Conference (IPC), but sentiment could be shifting as market players assess rising feedstock costs and the upcoming peak season in the US and Asia.

Contracts have faced downward momentum for the last few months amid lengthy supply and slower demand, especially in the presence of competitively-priced imports.

There is talk of the downtrend coming to an end though, with prices possibly bottoming out. But the industry is divided regarding the expected direction of the markets moving forward.

Some expect downward pressure to persist due to weak demand and high inventory levels, especially with a robust influx of imported material.

But others expect prices to creep upward due to stronger buying activity ahead of feedstock turnarounds in Asia and the peak coatings season, especially after a period of heavy destocking.

In general, while market players agree that an inflection point is in sight, they do not agree on a timeline.

Meanwhile, domestic supply and demand fundamentals largely remain unchanged as winter draws to a close, despite recent upstream production issues.

US buyers of imports continue to follow developments in Asia. There has been talk of impending feedstock bisphenol A (BPA) and epichlorohydrin (ECH) turnarounds in the region, boosting spot Asia epoxy since the end of January.

Asia epoxy has so far faced downward pressure from subdued demand, but that could change as March to May is typically when seasonal demand kicks in. The extension of a truce in the trade dispute between the US and China should also boost optimism.

Market players also continue to monitor China’s crackdown on urban emissions and increased focus on environmental regulations. The country eased some environmental measures, which will end in March, as China looks to shore up its economy amid a trade war with the US.

Epoxy resins have many downstream applications, including coatings, construction and automotive.

Major US epoxy resin producers include Hexion, Huntsman and Olin.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Tarun Raizada