After a pleasant and stable summer, epoxy resins prices have started to creep up again in all regions. Supply remains snug; the whole value chain is running on low inventories and transportation – both sea freight and inland – continues to be blighted by delays and high costs. Feedstock costs have remained strong. A heavy turnaround season in Asia has tightened bisphenol A availability and production stoppages in Europe and China have curtailed epichlorohydrin supply. The holiday season provided temporary relief but the question is: What lies ahead for the final quarter of 2021?
The epoxy resins market has hardly been given time to breathe following the bounce-back in post- Covid-19 demand. There have been months of sustained strong demand and short supply in all regions after China, the driving engine of the epoxy resins market, appeared to have an insatiable appetite for material earlier this year. Asian suppliers, keen to capitalise on the gold rush in China, dropped their European customers, leaving the US, Europe and the Middle East woefully short of supply. A severe cold snap in Texas back in February impacted domestic epoxy resins production in the US, creating the perfect storm in the industry, with prices in May soaring above and beyond record levels. During this time, sea freight and vessel space availability has become short and the costs of shipping material from Asia to the US have climbed to giddy heights. It has become a producers’ market – contract customers have been put on allocation – there have been up to 13 price increases since October 2020. Spot volumes have been commanding prices more than 100% above 2020 levels. Before July, there was a growing sense of fatigue in the market; consumers were worn out fighting for every last drop of material while suppliers were equally exhausted from handling repeated requests for additional supply. The summer holiday season over July and August gave participants temporary respite but a number of ongoing issues combined with possible turnarounds looming on the horizon may put further pressure on a deeply stressed market.
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