Category

Countries

Fire at Qilu Petrochemical Adds Fuel to China's Epichlorohydrin Price Rally During December 2023
Fire at Qilu Petrochemical Adds Fuel to China's Epichlorohydrin Price Rally During December 2023

Fire at Qilu Petrochemical Adds Fuel to China's Epichlorohydrin Price Rally During December 2023

  • 11-Jan-2024 2:20 PM
  • Journalist: Kim Chul Son

China's Epichlorohydrin market saw a significant rebound in December 2023, pushing prices higher due to a complex interplay of supply constraints, downstream dynamics, and a key accident leading to the tight flow of goods in the market. Despite the limited downstream Epoxy resin support, the Epichlorohydrin market showed no signs of slowdown during December. The major fire incident at Qilu Petrochemical added a layer of uncertainty and potential for further price hikes in the Epichlorohydrin market.

In a surprising turn of events, December saw a notable reduction in the overall Epichlorohydrin supply in the region which has steeply risen the prices from 1131 USD/tonne to 1174 USD/tonne Epichlorohydrin FOB Ningbo, China assessed in December 2023.  This supply constraint was attributed to the low production capacity utilization in the Chinese market. Manufacturers have prioritized fulfilling existing contracts, leading to limited spot supply and an atmosphere ripe for price hikes. Besides, factories in regions like Jiangsu, Zhejiang, and Shandong temporarily closed for maintenance, further tightening market availability. Along with this, Qixiang Tengda Chemical in Zibo kept their feedstock Propylene plant under maintenance turnaround having a capacity of 700,000 mt/year from mid-December till further announcement. However, the main downstream market, epoxy resin, exhibited average performance, offering limited support for Epichlorohydrin prices. Downstream enterprises remained cautious in their purchasing due to unclear market conditions. Despite having low downstream demand, the Epichlorohydrin market continued to surge during this timeframe under the influence of a tight flow of production.

Another major event exacerbated the Chinese market sentiments as a fire at Qilu Petrochemical's olefins plant On December 23rd disrupted propylene production, a crucial feedstock for Epichlorohydrin, further impacting supply. Qilu Petrochemical holds a prominent position in the Linzi District of Zibo City, Shandong Province, with substantial production capabilities in ethylene, propylene, and related downstream products. Propylene products are mainly for self-use and peripheral pipeline transportation, and parking has a relatively obvious impact on the local area. Henceforth, the Qilu Petrochemical fire and overall market stability led to a 100 yuan/ton increase in propylene prices, directly impacting Epichlorohydrin production costs. While offering some cost support, glycerol price fluctuations were minimal, limiting its impact on Epichlorohydrin pricing. The tight spot supply and tepid downstream demand created a supply-demand imbalance, favoring sellers and pushing prices higher. Additionally, manufacturers, facing low production capacity utilization and limited sales pressure, saw an opportunity to raise prices to maximize profits.

As per ChemAnalyst, the fire incident is expected to further surge the market dynamics of Epichlorohydrin during January 2024 as the impact of the Qilu Petrochemical fire on propylene production and subsequent Epichlorohydrin costs needs to be monitored.

Related News

Epichlorohydrin German Market Faces Downturn During March Amidst Slowdown in Construction Activity
  • 11-Apr-2024 2:15 PM
  • Journalist: Nina Jiang
Tight Spot Flow and Cost Pressure Surges Chinese Epichlorohydrin Market
  • 15-Feb-2024 2:54 PM
  • Journalist: Patrick Knight
Epichlorohydrin Prices Slump Amidst International Market's Sluggish Demand
  • 23-Nov-2023 12:44 PM
  • Journalist: Bob Duffler
Meghmani Finechem Accuses China, Thailand, and South Korea on Dumping Epichlorohydrin, India Initiates Investigation
  • 05-Oct-2023 5:01 PM
  • Journalist: Patricia Jose Perez