Epichlorohydrin German Market Faces Downturn During March Amidst Slowdown in Construction Activity
Epichlorohydrin German Market Faces Downturn During March Amidst Slowdown in Construction Activity

Epichlorohydrin German Market Faces Downturn During March Amidst Slowdown in Construction Activity

  • 11-Apr-2024 2:15 PM
  • Journalist: Nina Jiang

The price of Epichlorohydrin (ECH) in Germany, a key chemical used in paints and coating industries, has been experiencing a significant decline for months. This slump during March 2024 was attributed to both ease in supply and demand dynamics. The primary driver of the low ECH prices was the sluggish performance of the European construction sector, including Germany. This industry has been grappling with weak customer orders and a lack of business confidence for some time now. The recent interest rate hike in the Eurozone has further dampened its growth potential. Businesses were wary of the increased borrowing costs and their impact on project feasibility. This has led them to postpone or cancel projects altogether, resulting in a significant decline in demand for ECH, a crucial component in construction materials.

The persistent downtrend has resulted in a decline of ECH orders to settle the offered quotations at USD 2250/MT, ECH FOB Hamburg, Germany with a drop of 0.9% during March 2024. The ongoing crisis in Ukraine has added another layer of uncertainty to the European market. Businesses were hesitant to invest in new construction projects due to the volatile economic climate. Likewise, the downstream paints and coatings industry, a major consumer of ECH-derived epoxy resins, has also witnessed a significant decrease in demand. As construction projects stall and the overall economic climate remains uncertain, businesses in the paints and coatings sector have experienced a slowdown. Interestingly, despite the high cost of Propylene, a key raw material for ECH production, the overall production cost hasn't risen significantly. This was solely due to the lack of demand from downstream industries. With lower demand, producers have been able to absorb some of the Propylene cost increase, preventing a major rise in the production costs. The declining freight charges further exacerbate the low-price environment for ECH in Germany. With less demand for mainstream commodities across Europe, transportation costs have fallen. This decline in transportation costs puts additional downward pressure on the overall market price of ECH, creating a challenging situation for both producers and suppliers.

As per ChemAnalyst, the ECH market in Germany is expected to showcase some improvement in the upcoming month on the back of revived business confidence due to traditional seasonality. The expected increased project activity and a resolution to the ongoing crisis in Ukraine could trigger a rise in ECH demand. Additionally, any significant increase in Propylene costs could impact production costs and potentially lead to a price hike for ECH.

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