Grim Sept outlook for Asia's epoxy resins amid poor demand

Asian export prices for epoxy resins lost more ground this week as demand continues to languish, and prospects of a near-term turnaround seem grim amid escalating US-China trade tensions.

This week, sellers shaved another $20-40/tonne from their asking prices of epoxy resins, on a FOB (free-on-board) northeast Asia basis, in a bid to secure some buying interest.

By end August, the average prices for epoxy resins had fallen to $2,370/tonne FOB northeast Asia, $45/tonne lower than July.

“We probably have not seen bottom yet,” a seller lamented, adding that despite having scaled down his expectations repeatedly in recent weeks, buyers’ response remained lukewarm.

“Instead, buyers are pressing harder for even wider discounts,” the same seller conceded.

Buyers are staying low, as jitters rose about how a fresh round of retaliatory US-China trade tariffs imposed on 1 September would aggravate the situation in their own downstream markets.

In this frail economic climate, “no one wants to keep stocks or step up production,” an end-user said.

Epoxy resins is used to produce surface coatings, castings, laminates and adhesives, most of which have wide applications in the automobile sector, where production has been plagued by fledging car sales throughout the year in key Asian outlets like India and China.

In the meantime, epoxy resins makers could still seek some consolation that soft upstream values have helped to defray production costs and protect their margins to some extent.

For instance, feedstock bisphenol-A (BPA) slumped to three-year lows this week, and the outlook for co-feedstock epichlorohydrin (ECH) is also not rosy given poor demand.

But if downstream buying still fails to pick up, this could precipitate output cuts at epoxy resins plants, as northeast Asian producers sought to keep inventory levels under control, market participants said.