HOUSTON (ICIS)–US epoxy resins prices moved up in May, but feedback diverged this month on the degree of upward pressure that held in the market.

US May liquid epoxy resin contracts were assessed at an increase of 2 cents/lb ($44/tonne) on the low end and at an increase of 3 cents/lb on the high end. This marks the first increase seen in 13 months.

ICIS assessed the US May liquid epoxy resin contract price at $1.42-1.48/lb DEL (delivered) North America.

UPWARD PRESSURE
Market players were not in complete agreement regarding the separate 8-10 cent/lb price increases and their justifications this month.

In general, a slight to moderate portion of the increases went through amid upward pressure from feedstocks and a pickup in seasonal demand.

There were mentions of a big portion of the increases going through amid a hard push, but this could not be widely confirmed.

Some buyers also mentioned they saw no increase in prices, but they were either dealing primarily with imports or were not active in the market this month.

MARKET DRIVERS
US upstream phenol supply is improving and logistical issues are easing, but a force majeure on US bisphenol A (BPA) remains in place, as phenol supply is not back to normal levels yet.

Some pushed back and commented that feedstock developments did not fully justify the increases in light of balanced supply and demand.

Supply from domestic and import sources was healthy, with competitively priced imports also blunting some of the increases.

Meanwhile, seasonal demand from the coatings sector is kicking in, while demand from the automotive sector is steady compared to other regions amid healthy US economic fundamentals.

IMPORT TRENDS
Spot import prices are holding steady in the mid-to-upper $1.20s/lb, but offer levels were heard to be holding flat, inching up or inching down slightly depending on the country of origin.

There was no clear agreement about the markets in Asia, with some pointing to higher feedstock costs and stronger demand outside of China, and others mentioning the continued influx of imports and the lack of significant upward momentum from safety inspections in China.

Although demand has not really taken off in the region, there is no clear signal as to how prices may trend. While an economic slowdown could exert downward pressure, suppliers in the region may attempt to hold prices in an effort to preserve margins. In the following graph, the spread between Asia epoxy and epichlorohydrin (ECH) has narrowed since the start of this year.

OUTLOOK
Domestic demand is expected to increase over the summer during the peak season, but some buyers may be cautious about procuring too much material.

There is some uncertainty regarding the outlook for demand this year, making it unclear if there will be any year-on-year growth.

Economic uncertainty and nervousness about escalating trade tensions could affect underlying sentiment in Asia, hurting downstream demand and boosting the flow of material to the US.

Epoxy resins are used as adhesives on metals and construction materials, as well as in coatings and automobiles.

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

Click here to view related stories and content on the ICIS US-China trade war topic page.

Focus article by Tarun Raizada

https://www.icis.com/explore/resources/news/2019/05/28/10371300/us-may-epoxy-contracts-increase-amid-lingering-uncertainty

SINGAPORE (ICIS)–Spot import prices of polyether polyols in the Middle East declined and further weakness could be on the cards as some producers could offer discount to entice buying interest amid worries about the impact of the China-US trade war on downstream polyurethane foam demand.

Khor Fakkan port in Dubai, UAE (Photo by Deedee Degelia Brent Winebrenner Degelia/Mood Board/REX/Shutterstock)In the week ended 16 May, import prices of 10-13.5% polymer polyols (POP) drummed cargoes in the Middle East were lowered by $50/tonne to $1,650-1,700/tonne CFR (cost & freight) Middle East, after three straight weeks of stable pricing.

Meanwhile, import prices for conventional polyether polyols also fell by $50/tonne to $1,550-1,600/tonne CFR Middle East.

There were limited offers for conventional grade polyols to the Middle East and these matched the high end of the week’s range. One supplier indicated it had run out of conventional polyols for sale to the spot market in May.

For POP, the bulk of offers were within that $1,650-1,700/tonne CFR Middle East range but buying interest at these price levels was still generally muted.

One reason behind this was the fear that the escalating US-China trade tensions could eventually snuff out any recovery in demand for co-component toluene diisocyanate (TDI), which is used together with polyols in the manufacture of flexible foam products like mattresses.

But China suppliers this week were able to reduce their prices quite substantially because recent declines in the prices of feedstock propylene oxide (PO) in China had given these suppliers some flexibility to lower their prices without affecting their margins. Even so, the reduced prices generated limited demand from buyers.

Other Asian suppliers said they were facing persistently weak demand conditions and stiff pricing competition for polyols imports into the Middle East region.

“For polyols, our business is not doing so good – the demand is very slow,” said one Asian supplier.

A producer has reduced operating rates at its polyols plant to lower operating costs in the face of sluggish demand.

The Muslim fasting month of Ramadan, which started in early May, also further dampened market activity, according to market sources.

In Asia, polyols prices last week were assessed mostly lower as offers for certain grades softened on the back of poor cargo uptake from southeast Asian buyers.

The chart above shows the spread between feedstock PO import prices in China and POP prices in the Middle East. It shows the correlation between feedstock PO and prices of POP in the Middle East and indicates POP prices are likely to continue tracking PO.

Focus article by Izham Ahmad

https://www.icis.com/explore/resources/news/2019/05/21/10366213/middle-east-polyether-polyols-prices-may-mark-further-declines

SINGAPORE (ICIS)–Spot import prices of polyether polyols in the Middle East declined and further weakness could be on the cards as some producers could offer discount to entice buying interest amid worries about the impact of the China-US trade war on downstream polyurethane foam demand.

Khor Fakkan port in Dubai, UAE (Photo by Deedee Degelia Brent Winebrenner Degelia/Mood Board/REX/Shutterstock)In the week ended 16 May, import prices of 10-13.5% polymer polyols (POP) drummed cargoes in the Middle East were lowered by $50/tonne to $1,650-1,700/tonne CFR (cost & freight) Middle East, after three straight weeks of stable pricing.

Meanwhile, import prices for conventional polyether polyols also fell by $50/tonne to $1,550-1,600/tonne CFR Middle East.

There were limited offers for conventional grade polyols to the Middle East and these matched the high end of the week’s range. One supplier indicated it had run out of conventional polyols for sale to the spot market in May.

For POP, the bulk of offers were within that $1,650-1,700/tonne CFR Middle East range but buying interest at these price levels was still generally muted.

One reason behind this was the fear that the escalating US-China trade tensions could eventually snuff out any recovery in demand for co-component toluene diisocyanate (TDI), which is used together with polyols in the manufacture of flexible foam products like mattresses.

But China suppliers this week were able to reduce their prices quite substantially because recent declines in the prices of feedstock propylene oxide (PO) in China had given these suppliers some flexibility to lower their prices without affecting their margins. Even so, the reduced prices generated limited demand from buyers.

Other Asian suppliers said they were facing persistently weak demand conditions and stiff pricing competition for polyols imports into the Middle East region.

“For polyols, our business is not doing so good – the demand is very slow,” said one Asian supplier.

A producer has reduced operating rates at its polyols plant to lower operating costs in the face of sluggish demand.

The Muslim fasting month of Ramadan, which started in early May, also further dampened market activity, according to market sources.

In Asia, polyols prices last week were assessed mostly lower as offers for certain grades softened on the back of poor cargo uptake from southeast Asian buyers.

The chart above shows the spread between feedstock PO import prices in China and POP prices in the Middle East. It shows the correlation between feedstock PO and prices of POP in the Middle East and indicates POP prices are likely to continue tracking PO.

Focus article by Izham Ahmad

https://www.icis.com/explore/resources/news/2019/05/21/10366213/middle-east-polyether-polyols-prices-may-mark-further-declines