Epoxy
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…
August 12, 2024
Epoxy Highlights from Olin Call
Olin Corporation (OLN) Q2 2024 Earnings Call Transcript
Jul. 26, 2024 2:37 PM ETOlin Corporation (OLN) Stock
Q2: 2024-07-25 Earnings Summary
EPS of $0.66 misses by $0.03 | Revenue of $1.64B (-3.45% Y/Y) misses by $59.22M
Olin Corporation [OLN] Q2 2024 Earnings Conference Call July 26, 2024 9:00 AM ET
Company Participants
Ken Lane – CEO
Todd Slater – CFO
Steve Keenan – Director, IR
Ken Lane
Thank you, Steve, and good morning, everyone. I want start by saying how grateful we are that despite a direct hit on our Freeport, Texas facility by Hurricane Beryl, all our team members are safe. I’m very proud of how everyone responded. We saw the best come out, with colleagues supporting one another, not only on site during and following the storm, but with each other’s homes as well. Many team members experienced significant damage to their homes, and I want to personally thank all of those who stepped up to help during the recovery. While we did experience damage to some of our assets, Olin’s preparations limited the impact of the storm and kept our team members and neighbors safe.
Turning to our second quarter results, overall, the quarter unfolded as expected, with our chemical businesses improving modestly with seasonal demand gains and generally improved pricing. Winchester also delivered on its second quarter objectives as higher propellant costs were partially offset by improved pricing, continued strength in military, and a strong performance by White Flyer. Looking ahead to the second half, we now have greater clarity around the macroeconomic outlook, customer demand, and global supply. The industrial economic trough we find ourselves in looks to be longer-lived than typical. We expect Hurricane Beryl to represent a setback for our chemicals businesses of approximately $100 million during the third quarter. Based on our current outlook and including the effect of the hurricane, we have lowered our full-year 2024 adjusted EBITDA outlook. Olin remains in great shape with our investment-grade balance sheet, strong liquidity, and leading market positions. We will continue to be disciplined with our capital allocation strategy as we were during the quarter. Also, we remain focused on executing our value-first commercial strategy and continuing to anticipate a bright future as economic activity improves and Olin acts as a coiled spring to serve that recovering demand.
Turning to Slide 4, I’ll highlight our efforts in the second half to maximize cash flow. Our teams will continue to focus on cash generation by reducing capital expenditures in spite of hurricane Beryl requirements, maintaining cost discipline, and reducing working capital through the second half of 2024. We’ve done a lot of restructuring around our chlor alkali and epoxy assets, and expect to continue to realize benefits in the second half. We will continue to stay focused on cost, discipline, and explore additional cost-saving opportunities.
For a look at our epoxy business, let’s turn to Slide 6. Epoxy results continued to improve in the second quarter on lower cost and higher pricing. Third quarter epoxy results will be challenged by both the impact of Hurricane Beryl and our planned start at Germany epoxy resin turnaround. Our US epoxy anti-dumping case continues to progress on schedule, with an expectation for provisional duties to be set later this year. We are encouraged that the European Union recently launched a parallel investigation as we pull all available leavers to level the global playing field and combat the government-subsidized dumping of Florida epoxy. During the second quarter, we’ve seen several US and EU importers accelerate their epoxy import volumes. This raises the potential for retroactive duties to be applied, and we would expect our coalition of US producers to request this additional remedy. Olin has been clear with regulators in both the US and Europe that success on each front will be essential to keeping production of these critical materials in region.
JeffZekauskas
Okay. And in terms of your reassessment of demand for the second half, are there particular industry areas that have slowed relative to your expectations?
Ken Lane
Hey, Jeff, I’ll take that, and this is Ken. So, back in the first half of the year, even in the first quarter, there was a lot of expectation that we were going to start to see the economy improve in the second half of the year. I think that was a consensus pretty much across industries. And we were seeing some inquiries coming in around volume in the second half for our businesses, but as we got closer to that, they just didn’t develop because the economy, frankly, is still struggling to really start to grow again. I wouldn’t say that there’s any significant difference in any one particular industry. There were a couple that we thought there would be some more improvement than what we’ve seen maybe in the TiO2 space, maybe in polyurethanes. Both of those have continued to be stable but have not really shown any growth. So, in Q2, the volume uptick that we saw was more of a normal seasonal uplift. There was really no underlying growth that we saw in the market, which you would expect to see if you were going to see growth in the second half of the year.
Ken Lane
Yes, thanks for the question, Hassan. What I would say is we certainly are in the trough, and if you look at the last 12 months, that would I think certainly represent a trough level of earnings. And what I will say is, I think the expectations are that even if you look at the epoxy business, that is in a very unusual position relative to historic performance. So, that’s not a typical trough level. It’s really driven by the overinvestment that we’ve seen in China with the new capacity, and we know the impacts that that’s having on both Europe and to the US markets, which is why we’ve got the anti-dumping cases out there. So, that’s a bit of an unusual case, but I do think that the trough level of earnings is going to be somewhere around this level. I don’t expect that that it’s going to continue at this level significantly longer. As I said in my prepared comments, this is a very long trough that we’ve been in, and as soon as we start to see the green shoots, not just in the US markets, but also in the China market, we really need to see China start to recover and get the demand in the economy going there. Europe is probably closer to seeing some improvement, but it’s still very, very early, I would say, even in Europe.
Steve Byrne
And then just a quick question on these anti-dumping initiatives in the US and Europe with respect to epoxy, does that require some level of government support in order for those initiatives to get some traction? And what is it that you view as enabling those four countries to undercut you on price on epoxy? It would seem to be propylene and energy-related, but what’s your outlook for that?
Ken Lane
Well, again, our outlook is that we favor fair and free trade. That’s what we want to have. And what we have seen is over the last few years, there have been subsidized assets that are brought online that has created tremendous imbalances, and people are operating in a way that they’re dumping materials into these markets and threatening local production. So, as I said in the prepared remarks, if we don’t see some intervention with import duties to get some protection to the domestic producers, they are very much at risk. And I think these are materials that we want to continue to produce both in Europe and in the United States market. So, we’ll see how this all plays out. We expect to see some announcements around that later this year, and we hope that it’s favorable for the local producers.
Matthew Blair
Good morning. Thanks for taking my question. I’m glad everyone is safe after the hurricane. For that 100 million impact, is there a breakout between the CAPB and epoxy segments? And then I just want to confirm, but it sounds like the $940 million full-year guide actually does include an assumption of better cost of pricing in Q4.
Ken Lane
Yes, thanks for your question, Matthew. The split, if you think about the assets that we’ve talked about, it’s going to be around 70/30 roughly. Don’t make that too precise, but that’s kind of the range you can think about, 70 for chlor alkali, 30 for epoxy. I would use that as a rough estimate. And when we think about the back half of the year, yes, we see that there’s pricing momentum. So, in our outlook, we’ve included some improvement in the caustic market.
Arun Viswanathan
Okay. And well, maybe I can ask the question a little differently then. So, if you do have a resumption in normal operations, given some of the capacity that you’ve taken out, is that – would that be a limitation on your earlier comments maybe a little while ago that peak EBITDA is kind of in the $3 billion range? Maybe, is that now kind of two and a half or well below that? And then along those lines, do you see any kind of structural impairment to any of these markets? I know epoxy has gone through pretty significant pullback, especially in China, in demand. It’s unlikely that China will return to their prior growth rates. So, I don’t know if they’ve taken enough action to right-size their own epoxy market either. So, it seems like that business does have some structural limitations that weren’t there in the past. And then on chlor alkali, again, you’ve shut down some capacity. So, just wanted to understand if there’s been any change in kind of the earnings power of the businesses.
Ken Lane
Yes, well, listen, I said in the prepared comments as well that we’ve positioned ourselves very well with a set of assets that are going to be competitive in the long term. They’re very well positioned on the cost curve. We’re continuously looking at optimizing our asset portfolio, especially around chlor alkali, but our focus is going to be on operating those assets. As we see demand coming back, we will adjust our position in the market to be the ones that are capturing that growth. I mean, that’s really the way we’ve positioned ourselves. So, if you think about the capacity we took offline, it doesn’t take away the optionality for us to be that coiled spring as we’ve called it, to be able to respond when we see the growth coming back. With respect to epoxy, yes, structurally there are more challenges in that market. And that’s why, again, we’ve been so vocal about the anti-dumping cases that we have filed. We think that it’s very important that there is some support that comes into those markets. But ultimately, there probably does need to be some restructuring in the China market. There’s probably going to need to be some capacity that comes offline because to your point, it’s going to be a very long time before they’re able to grow into that capacity. And when you’ve seen these sorts of troughs in the past, that’s what’s happened. You’ve seen capacity come off in conjunction with growth in the market, and both of those things will typically correct themselves over time, but it’s going to be years, if not months before we see that happen.
July 10, 2024
Olin Force Majeure
Olin Corporation Provides Update on Hurricane Beryl
Jul. 10, 2024 4:10 PM ETOlin Corporation (OLN)
CLAYTON, Mo., July 10, 2024 /PRNewswire/ — Olin Corporation (NYSE: OLN) announced a temporary disruption of operations at its Freeport, Texas, facility as a result of Hurricane Beryl.
Olin has declared a system-wide Force Majeure for its Chlor Alkali Products & Vinyls division products and Aromatics shipments. This disruption is a result of hurricane-related damage to Olin facilities in Freeport, Texas, impacting Olin’s normal production and logistics capabilities including access to power, raw materials, and other essential feedstocks and services.
Olin facilities in Freeport are undergoing a comprehensive inspection and assessment, and a coordinated plan is being developed to ensure the safe and orderly return of these plants to service. The duration of this disruption is uncertain.
Olin’s number one priority remains the safety of our employees, their families, and the communities in which we operate.
June 9, 2024
SOMAR to Manufacture Epoxy Resin in WV
West Virginia Announces Facility for Epoxy Resin Product
For the automotive sector.
Industrial Media Staff
Jun 6, 2024
Office of the Governor Jim Justice
West Virginia Gov. Jim Justice and officials of Japan-based SOMAR announced that the company would establish a facility to manufacture an epoxy resin product used in the automotive sector.
The new facility will be located in Wood County within the Polymer Alliance Zone Industrial Park, utilizing an existing building for operations. SOMAR plans to invest a minimum of $2.5 million, creating employment opportunities for 25 individuals.
SOMAR, a family-owned company headquartered in Tokyo, supplies companies such as Toyota and Ford.
May 13, 2024
Wind Turbine Issues
Thousands of Old Wind Turbine Blades Pile Up in West Texas
Officials in Sweetwater say an out-of-state company has made their town a dump for the seldom-seen trash created by renewable energy.
Discarded wind turbine blades fill thirty acres on the west side of Sweetwater.
Update, May 6, 2024: Despite earlier assurances from Global Fiberglass Solutions that they would be removed with months, the blades remain in Sweetwater.
Update, September 25: General Electric filed a lawsuit last week claiming that Global Fiberglass Solutions has failed to fulfill its promise to recycle thousands of blades. GE says it paid the company $16.9 million to recycle about five thousand wind turbine blades, but that GFS instead stockpiled them at facilities in Sweetwater and Iowa. “Only after GFS took millions of dollars from GE, did GFS all but shut down its operations without recycling the Blades,” reads the complaint, filed in U.S. district court in New York.
GE says it later contracted with another company to recycle its blades and is seeking damages to cover these costs as well as reputational damage. Global Fiberglass has not responded to the lawsuit. GE removing its blades from Sweetwater wouldn’t clean up the giant dump; blades manufactured by other companies would still remain.
Every year since 1958, the West Texas town of Sweetwater has hosted the World’s Largest Rattlesnake Roundup, which is exactly what it sounds like. Thousands of the venomous ophidians are rooted out of their dens and brought to the Nolan County Coliseum to be gawked at, “milked,” and often beheaded and skinned. It started as a way for the region to rid itself of some of its least-welcome residents. Now community leaders wish they could do the same with several giant piles of scrap that have for too long been left to bake in the sun. But that’s proving to be much trickier than wrangling reptiles.
About forty miles west of Abilene on Interstate 20, Sweetwater has unwittingly become home to what is possibly the world’s largest collection of unwanted wind turbine blades. When forklifts deposited the first of these in a field behind the apartment complex where Pamala Meyer lives, on the west side of town, in 2017, she wasn’t initially bothered. But then the blades—between 150 and 200 feet in length and mostly made of composite materials such as fiberglass with a binding resin—kept coming. Each was cut into thirds, with each segment longer than a school bus. Thousands arrived over several years, eventually blanketing more than thirty acres, in stacks rising as high as basketball backboards. Every few dozen feet, a break among the stacks leads into an industrial hedge maze.
“It’s just a hazard all the way around,” Meyer said. She worries about neighborhood children exploring the unfenced piles and says that stagnant pools of water inside the blades breed swarms of mosquitos. Matt Jackson, who works in a nearby warehouse, has other concerns. The piles create shaded nooks and crannies, perfect for Sweetwater’s unofficial mascot. “It’s just a big rattlesnake farm,” he said.
The blades were brought here by Global Fiberglass Solutions, a company based in Washington State that announced in 2017 its intention to recycle blades from wind farms across the region. Instead of ending up in landfills, they would be ground up into a reusable material that could be turned into pallets, railroad ties, or flooring panels. Global Fiberglass is one of a few companies attempting to develop a viable business from recycling blades.
Besides the main boneyard—behind Meyer’s apartment—stacks of blades also occupy ten acres a couple miles south of town, and the company is storing blades in other locations in the county. “They have, in my view, abandoned them there,” said Samantha Morrow, the Nolan County attorney. “The county doesn’t have and cannot find millions of dollars to clean this up.”
The Sweetwater piles are also at least partly the indirect result of a rule clarification the Internal Revenue Service issued in 2016. Before then, a wind farm could collect valuable federal tax credits for only its first ten years of operation. But the IRS determined that it would restart the clock on the credits if a wind farm “repowered” its turbines—replacing most of their equipment with newer parts. So, despite the expected two-decade lifespan for turbine blades, wind farms across Texas and other states began replacing many that remained in good shape years early.
Some paid Global Fiberglass to remove the older blades and haul them away. The company set up shop in an empty industrial facility in Sweetwater that was once an aluminum recycling plant, but Don Lilly, the managing director of Global Fiberglass, told me that only a handful of blades have ever been ground up there. He said the company was close to ramping up and would soon mill the blades into pieces the size of coarse sand. “The blade material is sold,” he said, “but I can’t go into that part yet.”
Sweetwater has heard such pledges before. The county declared the stockpile a public nuisance a year ago. City attorney Jeff Allen said Sweetwater’s local ordinances are aimed at overgrown lots, not turbine blades, leaving the city with limited legal options. He said he believes Global Fiberglass “intended to be a viable business” but at some point “it just came off the rails.” (Lilly disputes this and says the delays have come from ensuring “all systems were engineered.”)
Sweetwater benefits from the wind-energy industry, including two large wind farms nearby. Drivers arriving on I-20 from either direction are welcomed by a giant wind turbine blade painted with the town’s name. But even the community’s biggest boosters of renewable energy long ago ran out of patience with Global Fiberglass’s mess. “We’d like to see them gone,” said Karen Hunt, director of the local chamber of commerce. “The sooner the better.”
Sweetwater isn’t the only place Global Fiberglass has stockpiled blades. It has a total of 1,300 in Newton, Iowa, and two other cities in that state, according to the state’s Department of Natural Resources. After an investigation, the agency concluded in 2021 there was no recycling going on, nor was any likely to happen. It declared the company to be running an unpermitted dump.
Frank Liebl, executive director of the Newton Development Corporation, testified at a state hearing that the initial excitement in 2017 of recruiting a blade-recycling company soon soured. In the intervening years, he asked Global Fiberglass many times when it would begin its recycling. He always got “the same answer: ‘Soon,’ ” he said.
By July 2021, the company owed more than $1 million in unpaid rent in Newton, according to testimony at the Iowa hearing from its landlord’s attorney. In Texas, it failed to pay taxes to Nolan County in 2020 and is now three years in arrears, according to tax records. Last year, the Texas Commission on Environmental Quality fined the company $10,255 for what it described as illegally stored solid waste. It allowed the company to pay the penalty in monthly installments for three years. In June, Global Fiberglass defaulted, according to the commission.
In Newton, pressure from the state of Iowa seems to have worked. Craig Armstrong, a city employee, said that General Electric recently acquired the blades. It’s unclear whether GE purchased them from Global Fiberglass or from the landlord who was owed the $1 million in rent, who may have taken possession of the blades. The city was promised that they would be sent to a recycling center by the end of the year, although none had been removed by mid-August, according to a Newton city official.
Lilly declined to talk about the Iowa blades. He said the situation in Sweetwater is different and insists that Global Fiberglass will grind down and recycle these blades. “If you come back nine months from now, you will not see the material,” he said. We’re marking our calendars and will check back in May.
https://www.texasmonthly.com/news-politics/sweetwater-wind-turbine-blades-dump/
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