For the Quarter Ending September 2023
North America
In the third quarter of October 2023, the North American Epichlorohydrin (ECH) market witnessed a mixed trend. In the United States, the price of ECH initially dropped by approximately 8% in the first months of the quarter. The main reason behind this decrease was the availability of cheaper imported products from overseas in the country. The global market also saw a decrease in the price of the product, which further influenced the downward price trend for ECH. Moreover, the demand for ECH from the downstream epoxy resin market was low, contributing to a bearish trend in the market. However, the price of ECH increased in the last two months of this quarter largely attributed to improved demand for products within the downstream Epoxy Resin market. This surge in demand created a positive ripple effect on Epichlorohydrin pricing as it is a key ingredient in epoxy resin production. Simultaneously, global market dynamics played a role in influencing prices, with products worldwide seeing an increase. One notable impact of this global trend was observed in the import of Epichlorohydrin products into the USA. As prices rose internationally, it impacted the cost of importing these products into the country, contributing to the price increase in the US market. This interconnectedness of global markets underscores the importance of monitoring international trends in chemical pricing. In the Chinese market, Epichlorohydrin prices also saw an upward trajectory, with an approximate 2% increase. This rise was primarily due to insufficient supply, highlighting the delicate balance between supply and demand that dictates pricing dynamics within the chemical industry.
APAC
Throughout the third quarter of October 2023, the APAC region witnessed a mixed trend in the Epichlorohydrin (ECH) market. The Chinese market, in particular, experienced a significant price decline of approximately 8% during the first month of the quarter, primarily attributed to the adverse impact of typhoon weather and heavy rainfall. Construction conditions in South and East China were unfavourable, leading to sluggish market demand and increased inventory pressure on manufacturers. This resulted in an overall weakened market scenario. The downstream construction industry bore the brunt of extreme weather conditions, with construction sites in South and East China suffering from unfavourable conditions. The imbalance between supply and demand in the ECH market further exacerbated the situation, forcing manufacturers to adopt price reduction and promotional strategies in an effort to stimulate sales. However, the price of ECH increased by around 2.8% and 0.3% in the last two months of this quarter as the price of feedstock glycerine while there was an upward trend in the cost of raw material propylene, which exerted notable cost pressure on producers. Interestingly, several enterprises managed to maintain comfortable inventory levels, which reduced the urgency to sell goods at lower prices. Consequently, the selling mentality within these enterprises remained relatively firm. Nonetheless, the overall market sentiment was cautious, with most downstream players adopting a wait-and-see approach due to anticipated increases in supply.
Europe
During the third quarter of 2023, the European Epichlorohydrin (ECH) market witnessed a bearish trend. In Germany, ECH prices saw a notable 5% decline during the third quarter of 2023 largely attributed to a pronounced decline in demand from the construction industry. This decline was primarily attributed to the impact of high interest rates and soaring building costs, which have significantly dampened the enthusiasm for new construction projects across Europe. Despite these challenges, the construction sector has managed to maintain stability due to the continuation of ongoing projects and an increased emphasis on sustainability. However, the economic uncertainty has cast a shadow of doubt on some previously secure orders. Furthermore, the rising costs of materials have added to the woes of businesses in the building industry, leading to consistently lower profit margins than initially anticipated. These economic conditions have created a less favourable environment for potential buyers and investors, leading to a subdued appetite for our product. Consequently, this weaker demand has exerted downward pressure on prices, contributing to a bearish trend in the market.
For the Quarter Ending June 2023
North America
The Epichlorohydrin (ECH) market in the United States observed a decrease in its prices during the second quarter of 2023. This decline was mainly attributed to the reduced feedstock Propylene cost and increased production of raw glycerine. During this period, the price of feedstock Propylene decreased by around 18.5%, 12.8%, and 8.5%, respectively. As a result, the price of ECH decreased by approximately 5.5%, 1%, and 3.5% in April, May, and June, respectively. Furthermore, the lower consumption of products in downstream epoxy resin, paints and coatings, automotive, and building and construction sectors drove the market during this period. Moreover, the product supply in the country was high, and no shortage of material was noticed during this quarter. Moreover, the labor shortage in the USA and the US bank crises after the failure of Silvergate Bank, Signature Bank, and Silicon Valley Bank (SVB) disrupted the availability of financing and lending options for construction projects. Construction companies often rely on banks and financial institutions to secure loans and credit lines to fund their projects. SVB's failure led to a reduction in available credit or tighter lending standards. The construction industry faced challenges in securing the necessary capital for their projects, potentially leading to delays or cancellations of the demand for construction products. The decrease in demand for construction products directly impacted Epichlorohydrin prices.
APAC
In the second quarter of 2023, the Asian market experienced a decrease in Epichlorohydrin (ECH) price. In China, the prices of ECH increased by around 0.5% in April 2023. However, in May and June 2023, the product's price decreased by approximately 4%, and 9.5% also declined. The major reason behind this price trend was the lower cost of feedstock Propylene, as it declined nearly 3.1% and 7.8% in May and June 2023, respectively. With decreases of around 8% and 8.7% in May and June, respectively. The end-use construction industry was trying to get revived during this quarter but did not perform well due to sluggish overseas demand from USA and Europe. In India, the Price of ECH increased by around 1.2% in the first month of this quarter as the demand for the product from the downstream Epoxy Resin market increased, whereas the supply was moderate. In May and June 2023, the price of products decreased by around 1% and 4%, respectively, primarily due to declined value of feedstock Propylene as it decreased by approximately 3% and 8%, respectively, during these two months. In the last month of this quarter, the price of Epichlorohydrin CFR JNPT (India) was hovering around USD 928.98/MT.
Europe
In the second quarter of 2023, the European Epichlorohydrin market experienced a bearish market trend in the first month of this quarter as feedstock Propylene prices declined by around 5.5%. Furthermore, macroeconomic factors such as high inflation negatively affected consumer spending, further contributing to the bearish sentiment in the market. The buying momentum from derivative sectors, particularly constructions, and consumer goods, has significantly weakened as many buyers prioritize maintaining minimal inventories and acquiring materials only when necessary. The strike by dock workers at the Port of Hamburg, Germany, is the nation's busiest and the second busiest in Europe. This strike impacted the export of Epichlorohydrin and further helped to decline the product's price in the country. However, in the last two months of this quarter, the market situation was bullish prices increased by 1% and 3.8%, respectively, due to increased demand for products from overseas as the USA fulfilled most of the Epichlorohydrin demand from Europe. However, the supply was limited in the region.
The price of Epichlorohydrin has decreased over the quarter ending March 2023 due to factors such as enhanced imports from Europe, decreased demand from downstream paint and cosmetic companies, and a reduction in freight charges. This price reduction was also supported by the lowered cost of propylene, the base material used in the production of Epichlorohydrin. As a result, the commodity was being traded at USD 2516 per MT on a CFR - New Jersey basis in March 2023. However, at the start of the year, the price of Epichlorohydrin remained unchanged due to a consistent demand-to-supply ratio. The US dollar has appreciated against the Euro by about 0.20% between January 30th and February 3rd, 2023, and this currency fluctuation had an impact on the epichlorohydrin market this quarter.
In the first quarter of 2023, the cost of Epichlorohydrin decreased in the APAC region. The lower price was a result of reduced propylene costs, which is the base material for making Epichlorohydrin, and moderate demand from downstream textile and cosmetics businesses. As a result, Epichlorohydrin was traded at USD 1406 per MT on a FOB - Ningbo basis. The quarterly market situation for Epichlorohydrin was bearish, with modest growth in international demand amidst economic slowdown across the globe. Stock volumes of the commodity were over-supplied amidst consistent production rates. Moreover, the price reduction of Epichlorohydrin in the mid-quarter resulted from the lower upstream crude oil prices and muted demand from downstream businesses.
The price of Epichlorohydrin has experienced stability in the quarter ending March 2023, traded at USD 2,970 per MT on FOB – Hamburg basis in March 2023. The price stagnancy was attributed to stable propylene prices and consistent demand from downstream companies, with no significant disruptions to supplies. At the start of the year, the demand-to-supply ratio remained stable and led to only a marginal price increase in January. The bearish market situation was characterized by moderate supply and moderate demand in this quarter of 2023. The product moderately appealed to cosmetics and textile manufacturing companies, and despite the recent price concessions, purchasing activity has not shown significant changes in the first quarter in the European market.
