US May epoxy contracts increase amid lingering uncertainty
Source: ICIS News
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.
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.
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.
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.
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.
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Focus article by Tarun Raizada