HOUSTON (ICIS)–High feedstock costs and import prices are expected to remain the main drivers for the US epoxy resin market in 2018.
US epoxy resin contract prices have been moving up steadily since the fourth quarter of 2017. Prices moved up first as domestic supply tightened in the aftermath of Hurricane Harvey. Prices then continued to move up due to upward pressure from high raw material costs and firm spot import prices. During this time period, producers in the US pushed for several price increases and were able to implement them at least partially.
Pricing in 2018 is expected to face similar dynamics, sources said.
Feedstocks bisphenol-A (BPA) and epichlorohydrin (ECH) prices are currently high in the US and Asia and are likely to remain that way going into 2018.
In China, feedstock BPA prices recently hit multi-year highs and are set to continue rising due to tight supply stemming from strong downstream demand and anti-dumping measures.
Further upstream, the planned idling of one of Shell Chemical’s two US acetone units in 2018 will further tighten feedstock supply.
However, US epoxy resin buyers are expected to push back somewhat on price increases, as availability of domestic material itself remains good, while demand is slow on seasonality.
Overall demand growth of epoxy resins in 2018 should be steady, with some slight growth related to US GDP levels.
A major source of increased demand could come if global crude oil values rise and production increases.
Demand could also get a boost in 2018 from post-Hurricane Harvey reconstruction activity in the housing and coatings sectors.
Meanwhile, high spot import prices will continue to place upward pressure on US epoxy resin prices.
Spot prices in China have been moving up due to tight supply, strong demand, strict environmental regulations and firm feedstock prices.
This has resulted in higher prices for imported Asian material as producers there are not keen to export cargoes, since they can achieve better netbacks in their own region.
As a result, US buyers have been dissuaded from purchasing imported material. Enquiries for imports have been muted from US buyers as domestic cargoes are available at competitive prices.
This may lead to spot liquid epoxy resin prices in northeast Asia being weighed down as buying appetite in the key export markets of southeast Asia, Europe, the Middle East and US is expected to weaken.
Major US epoxy resin producers include Hexion, Huntsman and Olin.