Europe’s Epoxy Resin production drought to extend till April
- 07-Apr-2022 5:52 PM
- Journalist: Harold Finch
As European manufacturers struggle to maintain consistent production levels in the backdrop of high energy and operational costs amid significantly tight raw material supplies, Epoxy Resin production levels in Europe had come down drastically in the month of March, especially since mid-March when Olin Corporation announced a temporary suspension of its Epoxy Resin manufacturing at its facility in Stade, Germany.
Demand in the first quarter in Europe was weaker than expected, and the situation was further exacerbated by the onset of war in Eastern Europe. Olin was reluctant to operate at a less than 50% operating rate on account of poor market performance of the product and had ultimately decided to pause production for the time being. Spot prices for the months of February and March have not reflected the cost-push from domestic producers, including Dow Chemicals, Huntsman Co., and Olin.
The month of March saw producers once again contemplating a pre-emptive cost-push to leverage the shortage in supply of feedstock Epichlorohydrin and the skyrocketing crude oil and LNG prices in the first week of March. Demand, however, was lackadaisical for the most part of March, prompting producers to be more conservative in their production rates as well as raising the contract prices for the same month.
The current market scenario is expected to continue until April’s end, when we predict a relaxation in the feedstock costs as well as a softening of raw material supplies. Epoxy Resin demand in the US and Europe generally goes up in the second quarter. However, the unique geopolitical and economic quagmire that the European economy finds itself in now could delay the growth in demand by three to four weeks. This means the European Epoxy Resin market could finally see some shoots of recovery by the early to mid-May period when demand finally picks up as per ChemAnalyst’s assessment for the quarter ending June.