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A Bumpy Ride for the Epoxy Resins Market as Prices Hit Record Highs

December 03, 2020 | Jennifer Hawkins

After an abysmal Covid-hit May-June, the epoxy resins market was relieved to see the first shoots of improving demand in July and August. However, by the end of September, it was starting to become evident that demand in China was picking up at a pace that no one had predicted. Availability of epoxy resins in China has become so tight that consumers cannot get their hands on product even if they are willing to pay exorbitant prices. The situation is a far cry from earlier this year and according to market participants, the tightness is going to get worse.

In China, the epoxy resins industry finally managed to shrug off the impact of Covid-19 in the final quarter of 2020 as consumer confidence returned and downstream manufacturing output was increased. Material then started to become snug in early October when a S. Korean-owned epoxy resins producer in China, Kukdo Kunshan, reduced its operating rate to 50% capacity following a technical issue. Then, in early November there was an accident at the plant, which caused serious injury to two workers. It is thought that the plant will now be shut for two months. To make matters worse, the other major South Korean producer Kumho is currently shut for a turnaround.

As a result, liquid epoxy resins (LER) prices have surged to unprecedented levels in China, outperforming the highest levels seen in December 2017. Demand in China is good but it has been particularly strong from the wind energy sector. Government subsidies are due to finish by end 2020, so the wind industry has been running at full pelt to get as many turbines produced while there are incentives in place. But market participants say that material is now so difficult to come by that pricing has almost become irrelevant. It does not matter how much customers are willing to pay if there is just not the availability.

 

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