China’s EPDM Market to Welcome a New Round of Price Increases

China’s EPDM market fluctuated within a narrow range in 2017. Affected by the environmental protection inspection, market supply was insufficient and the demand was weak. With the tight supply combined with decreasing inventories at downstream plants, China’s EPDM market may welcome a new round of price increases. Market sources said that the supply prices of EPDM may inch up in the short run. Prices of Chinese-made EPDM may see a RMB 500–800/mt increase, and USD offers for imported EPDM are expected to rise by $50–100/mt.

Market supply was tight.

The supply was tight in China’s EPDM market recently. Firstly, the overall operating rate of EPDM units was low in China. Besides, some producers maintained low inventory levels. Resources of some grades were even out of stock. Secondly, the total import volume of EPDM from May to July was about 46,500mt, decreasing by 1.48% year on year. Hereinto, the supply of EPDM from Dow was scant, and the limited goods were mainly supplied to end users. ExxonMobil shut down its plants (located in France) for maintenance in September and October. The units at KKPC were running at low loads, and the producer limited their supply. The tight product availably backed up China’s EPDM market.

Feedstock prices went up.

Feedstock prices were mainly on an uptrend from May to July. Prices of ethylene increased by around $300/mt in mid-September, compared with those in early August. Offers for propylene rose by around $100/mt.

Prices of ENB were kept at RMB 29,000/mt from May to August. However, with the large upward movement of butadiene coupled with the low operating rates of EPDM units, the ex-works price of ENB rose by RMB 1,000/mt. Some EPDM producers purchased imported ENB as their raw material, which contributed to higher cost.

Demand was strong.

EDPM was usually in great demand from October to December. Although the influence of environmental protection inspection was great, some downstream users planned to stock up before the price goes up. The demand for EPDM may perform well in Q4, 2017.

Overall, both prices of Chinese-made EPDM and offers for imported EPDM are expected to rise in the coming period, but the upward movement of EPDM prices may be limited on the slow growth of demand.