Current Affairs
September 8, 2024
Epoxy Resin Anti-dumping Analysis
Epoxy Resin Anti-dumping in an Era of Keen Economic Protectionism
Jane Denny : Aug 19, 2024 2:35:26 PM
Petrochemical TrendsNorth American Chemical MarketEpoxy Resin
European and US-based epoxy resin producers have triggered anti-dumping investigations against Asian producers in a bid to stop cheap imports. Meanwhile, India—the subject in the US complaint—claims to be a victim of dumping activity, too.
Last month, US-based chemical manufacturing companies Olin and Westlake and Spolchemie—based in the Czech Republic—submitted data to the European Commission (EC) outlining uncompetitive practice. Following the complaint, the EC initiated investigations into trading by producers in China, South Korea, Taiwan, and Thailand.
The move follows the initiation of a probe into the same countries—with the addition of Indian epoxy resin producers—by the US Department of Commerce and the US International Trade Commission in April 2024.
India’s Ministry of Commerce meanwhile, has initiated an anti-dumping investigation into liquid epoxy resin imports from the same countries as those under European Union (EU) and US scrutiny, and Saudi Arabia too.
Source: ResourceWise
What Is Anti-dumping?
Dumping occurs when imported products are made available to buyers at prices lower than fair market value. Investigations are triggered when domestic producers raise concerns about the prices of foreign goods sold in their domestic markets.
Under EU conditions, there is a two-step test to ascertain whether dumping has occurred. Firstly, the export price of a product must be lower than its selling price in the exporting country. Secondly, the product’s availability in the market must have been injurious to the domestic producer community’s business.
If investigators find that dumping has occurred, measures are put in place to mitigate the problem.
China’s Capacity Growth Key
Jennifer Hawkins, Chemicals Sector Business Manager at ResourceWise, points to China’s significant increase in epoxy resin capacity in recent years, as shown in the infographic above.
“The growth in China’s domestic capacity has forced producers in South Korea and Taiwan to export their epoxy resins to other markets outside China—their erstwhile customer. At the same time, China, historically a net importer of epoxy resins, has started to export volumes to other regions too,” says Hawkins.
White Paper Download
Download Hawkins’ analysis of EU and US ADD investigations and International Trade Commission conference submissions, including insight from her epoxy resin market contacts.
In our 2022 blog post, How Will New Capacities Reshape the Epoxy Resin Market?, we explored China’s extra epoxy resin production capacity. With more of that planned expansion now realized, an oversupply scenario has replaced the tightness in global supply that triggered the expansions.
Back then, we predicted that “a supply glut… will undoubtedly create fierce competition, drive prices down, and possibly encourage a rise in exports.” This has now come to fruition.
Source: ResourceWise
China’s current spot liquid and solid epoxy resin prices are close to their lowest price point over the past near-decade, back in 2016. And even then, the drop was relatively fleeting. Both products have remained low and relatively flat since the close of 2023, as they have in Northeast Asia.
Modest rises have been seen in North American and European pricing structures this year. However, as the graph below shows, North American prices alone did not see any significant increase up to the end of 2023, which producers there have maintained to this day.
Measures to Protect
Anti-dumping duties are imposed by authorities within the country—in the case of the US—or region—such as the EU trading block. They are designed to level up the prices of incoming goods with those produced and sold domestically.
In the EU, producers selling into the region may be taxed according to transaction value or per specific amount of the product. The exporter may even agree to sell products at a minimum price.
In both Europe and the US, complainants sought an investigation into the level of dumping by China, South Korea, Taiwan, and Thailand. They seek adjudication on the question of whether dumped imports have caused material injury to the domestic epoxy resin industry.
The US-focused scrutiny was initiated following a complaint by Olin and Westlake. Unlike the EU complaint, the US complaint requests an investigation of India’s alleged dumping activities.
European Epoxy Resin Anti-dumping
In the EU-focused complaint—in which Spolchemie is a complainant alongside Olin and Westlake—it is alleged that exporting producers from Asian countries have injured European epoxy resin producers. The countries claim that they are selling products in the EU market at unfairly low prices, which significantly undercuts the prices of European producers.
| Country | Dumping margins alleged |
| China | From 140% |
| Korea | From 10% |
| Taiwan | From 20% |
| Thailand | From 60% |
∗ See our free-to-download white paper for upper margins alleged
Epoxy Resins Plant Shutdowns
Speaking to the EU complaint, Olin Epoxy & International president Florian Kohl president said: “Although this issue is not unique to epoxy, nor to the EU, the significant volume of what we believe are unfairly dumped imports of epoxy resin have a seriously negative impact on the EU.”
In March 2023, Olin announced plans to cease operations at its Cumene facility in Terneuzen, Netherlands. and solid epoxy resin production at its facilities in Gumi, South Korea, and Guaruja, Brazil.
At the time, the company described it as a “step to right-size our global epoxy asset footprint to the most cost-effective asset base to support our strategic operating model.” However, as part of that announcement, Olin referenced the softness of global epoxy demand and the surplus supply in the market.
Source: ResoureWise
Market Dynamics At Play
In the US-focused complaint, the country’s Department of Commerce has been asked to assess allegations involving exponentially higher margins.In part, the elevated price tags attached to epoxy resins in the US account for the significant price gap compared to all other regions.
In fact, global epoxy resin price graphs from the chemicals business intelligence platform OrbiChem360 indicate the price differential between North American products and Asian output is several thousand dollars. With Asian producers subject to lower output costs, that price gap creates an opportunity for exports to US buyers.
| Trading Partner | Dumping Margin alleged |
| China | From 266.37% |
| India | From 9.92% |
| Korea | From 35.29% |
| Taiwan | From 91.15% |
| Thailand | From 143.73% |
∗ See our free-to-download white paper for upper margins alleged
Subsidized Industry and Anti-competition
According to a report by the US International Trade Administration (ITA), all countries under investigation for anti-dumping (except Thailand) will also be tested for Countervailing Duties (CVD). Also termed anti-subsidy duties, they are designed to counter the negative effects of subsidies.
The suggestion is that within all the countries named in the US complaint except Thailand, respective governments are propping up the epoxy resin sector with incentives. Established under World Trade Organization (WTO) rules, a subsidy includes grants, loans or tax credits.
Anti-dumping Duties: A Trending Solution
Anti-dumping measures are being implemented with increasing frequency as companies—and nations—seek to protect regional and local market shares.
In 2023, the EC proposed duties of between 6.6% and 24.2% for Chinese polyethylene terephthalate (PET) producers found to be importing goods at uncompetitive prices.
Similarly, the EC’s recent initiation of provisional anti-dumping duties against the majority of China’s biodiesel and hydrotreated vegetable oil (HVO) exporters has rocked natural product markets. Our blog post, Oleochemicals Volatility on the Horizon, explores the impacts.
Countries also rely on other means to halt the import of goods from competitor nations. In a blog post, India Halts Imports For Key Intermediate Chemical From China, we explored the Bureau of Indian Standards ruling, which has halted China’s PTA imports.
Future-gazing: Epoxy Resin Supply Chain
China continues to roll out expansion plans that were set in motion before the current downturn. Those expansions are rendering deals formerly made between China and countries such as South Korea and Taiwan unnecessary today. Producers that previously found buyers in China are now looking further afield.
China’s producers, who are faced with a weak domestic market, are also looking for customers in Europe and the US. If offering products at prices significantly lower than domestic producers wins the sale, they will likely do that.
If epoxy resins are subject to provisional anti-dumping duties after the investigations, how will Asia respond? Will the region’s producers still offer products at prices that bear the duty charge and remain attractive to buyers?
Only time will tell…
September 5, 2024
Housing Update
Single-family demand is up, multifamily construction down
By Dakota Smith
September 3, 2024 | 10:12 am CDT
A lack of resale homes and pent-up demand more than offset high mortgage rates and contributed to solid single-family permit growth across nearly all geographic regions in the second quarter. However, multifamily construction permit activity continued its slide downward across the board to the start 2024. Meanwhile, single-family and multifamily construction exhibited strong growth in second-home markets over the past decade, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the second quarter of 2024.
Single family
“Despite the elevated interest rate environment, single-family construction continues to move along at a better pace than 2023 and has been led by a rebound in construction activity in high-density areas,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kansas. “Multifamily construction continues to slow as builders deal with higher rates, a shortage of workers, and supply chain concerns for some building materials.”
“The strength in single-family construction at the start of the year continued in higher density areas, matching other data indicating a gain for townhouse construction in 2024,” said NAHB chief economist Robert Dietz. “New data on second homes points to most housing construction taking place in areas with fewer second homes, as most second family homes are located in less urban areas such as non-metro counties.”
The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies.
The single-family permit growth rates for all of the HBGI geographic regions were positive in the second quarter, with five of the seven posting double-digit gains. Large metro core counties had the highest growth rate for the second straight quarter at 17.6%. Micro counties had the smallest growth rate, posting a 3.4% gain.
All seven HBGI geographic regions posted negative multifamily permit rates in the second quarter because financing remained tight and high levels of construction inventory of just under 900,000 units are limiting the need for new multifamily permits. This weakness is consistent with the NAHB Multifamily Production Index, which had a second-quarter reading of just 44, marking a year-over-year decrease of 12 points.
Second homes
Using the latest government data on second homes, the HBGI found that 17.5% of single-family home construction and 8.6% of multifamily development occurred in second-home areas during the second quarter of 2024. NAHB defines a second home area as a county where at least 10.3% of the total housing stock consists of a second home.
The county that had the highest share of second homes was Hamilton County, N.Y., where 75.3% of homes were considered a second home based on NAHB’s definition. By contrast, Scott County, Kan.; Andrews County, Texas; Crane County, Texas; and Hansford County, Texas all had no second homes.
The 17.5% of single-family construction in second-home counties during the second quarter of 2024 is up significantly from the fourth quarter of 2014, when these second-home counties posted a single-family market share of 12.9%.
On a percentage basis, multifamily construction in second-home counties experienced a higher growth during the same 10-year span, rising from 4.6% in the fourth quarter of 2014 to 8.6% in the second quarter of 2024.
Key findings
- The year-over-year growth rates for all single-family markets further increased to positive territory, adding to the gains recorded in the first quarter. This positive news was fueled by the limited amount of existing inventory and pent-up demand for single-family construction.
- In the multifamily sector, growth rates remained negative for all markets, continuing the downward trend from last quarter. With over 900,000 apartments currently under construction (the most since 1973) and tighter financial conditions, multifamily construction is slowing from the last year’s highs.
- Labor shortages, supply shortages and higher mortgage rates continue to be issues for both the single-family and multifamily markets.
The full HBGI data with geographic market shares and growth rates can be found here
August 29, 2024
US Auto Sales
August 27, 2024
New home sales rise in July
By Dakota Smith
August 26, 2024 | 10:57 am CDT
Sales of newly built, single-family homes in July rose 10.6% to a 739,000 seasonally adjusted annual rate from significant upward revisions in June, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in July is up 5.6% from a year earlier. After the notably higher revisions for the May and June data, new home sales from January through July of 2024 are up 2.6% in 2024 compared to the same period in 2023.
“Despite the monthly bump in new home sales data, higher rates continue to sideline buyers as housing affordability challenges remain,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. “The only sustainable way to ease high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
“While mortgage rates moved lower in July, the Census estimated gains for new home sales do not match recent industry survey data including the NAHB/Wells Fargo Housing Market Index which showed weakness in the current sales index,” said NAHB chief economist Robert Dietz. “The Census estimate of new home sales is often volatile and subject to revisions and it is possible that the July estimate for sales will be revised lower next month. NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower.”
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. In addition to adjusting for seasonal effects, the July reading of 739,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in July ticked lower to a level of 462,000, down 1.1% from the previous month. This represents a 7.5 months supply at the current building pace. While this reduced level of months’ supply is above the commonly used balance measure of 6, the measure of total home inventory is lower. Given a lean level of resale inventory, total home inventory (new and existing) is near 4.5, which remains low.
The median new home price was $429,800, up 3.1% compared to last month, and a 1.4% decrease from this time last year.
Regionally, on a year-to-date basis, new home sales are up 5.4% in the Northeast, 22.1% in the Midwest and 6.1% in the West. New home sales are down 2.4% in the South.
https://www.woodworkingnetwork.com/news/woodworking-industry-news/new-home-sales-rise-july
August 26, 2024
Latest Canadian Rail Strike Update
Canadian agency upholds binding arbitration order to end rail dispute
Union says it will appeal ruling to federal court
· Saturday, August 24, 2024
This story originally appeared on Trains.com.
OTTAWA, Ontario — The Canada Industrial Relations Board has affirmed the decision by Labor Minister Steven MacKinnon to end the work stoppages at Canadian National Railway and Canadian Pacific Kansas City, requiring the railroads to resume operations and to impose binding arbitration between the railroads and the Teamsters Canada Rail Conference to resolve new contract terms.
Operations are to resume by 12:01 a.m. ET on Monday, Aug. 26, while the labor contract that expired on Dec. 31, 2023, is extended until a new agreement is completed. The start of the arbitration process will begin with a meeting with the CIRB on Thursday, Aug. 29, at 11 a.m. ET.
In response to the decision this evening (Saturday, Aug. 24), the union has said it will comply, but will also appeal the CIRB ruling to federal court.
“This decision by the CIRB sets a dangerous precedent,” TCRC President Paul Boucher said in a statement. “It signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union. The rights of Canadian workers have been significantly diminished today.”
A statement from Canadian National says the railroad will comply with the order. “While CN is disappointed an agreement could not be reached at the bargaining table,” the statement reads, “the company is satisfied that this order effectively ends the unpredictability that has been negatively impacting supply chains for months.”
CPKC also said it would comply and was ending the lockout it imposed on Aug. 22. The railroad’s statement said it was asking TCRC workers to return to work for the day shift on Sunday, Aug. 25, “so that we can get the Canadian economy moving again as quickly as possible and avoid further disruption to supply chains.” CPKC said the CIRB ruling “ends months of unnecessary uncertainty and disruption” for the economy, but also cautioned that it will take “several weeks” for the rail network to fully recover and “a period of time beyond that for supply chains to stabilize.”
The CIRB, in a pair of decisions — one addressing each railroad — said it determined it “does not have the authority to review the minister’s directions or to assess their validity,” saying that is a matter for the courts, and that it further “has no discretion for ability to refuse to implement, in whole or in part, the minister’s directions or to modify their terms.”
MacKinnon had announced his decision to send the matter to arbitration on Thursday, Aug. 22 — about 17 hours after both railroads locked out members of the TCRC. But rail operations remained in limbo as CPKC awaited the board’s ruling before advancing its plans to restart operations and the union kept its picket lines up at that railroad in the interim. CN ended its lockout on Thursday at 6 p.m. and the union originally said it would return, but then issued a strike notice effective at 10 a.m. on Monday, Aug. 26, while it awaited the CIRB action, saying the move was intended to “pressure CN into negotiating an agreement.”
CN’s statement notes that the CIRB ruling prohibits any further labor stoppage during the arbitration process, and therefore voids the TCRC strike notice.
MacKinnon, in a post this evening on social media site X, said he expected the railroads and employees to “resume operations at the earliest opportunity.”
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