For the Quarter Ending June 2022
North America
In the North American region, the price movement of Epichlorohydrin remained shifting, and product prices oscillated marginally during Q2. However, the overall costs rose by 16% from the previous quarter. The feedstock Propylene and Chlorine prices fluctuated in the region, which impacted the production costs of ECH. Energy and fuel costs also rose during the quarter, which induced cost pressure. The demand from downstream epoxy resin manufacturers remained firm from paint industries for construction and automotive, which grew significantly towards the end of the quarter, and overall product costs rose. The product offtakes remained consistent in the region's domestic market.
Asia
The price trend of Epichlorohydrin fluctuated during Q2 of 2022 in the Asian region, and the product's prices rose by almost 10% from the previous quarter. For the first two months, the product's prices plunged steeply during the mid-quarter due to the region's strong demand from the downstream Epoxy resin producers after the lockdown in China. However, at the end of the quarter, product prices dropped marginally, and production rates curtailed as the orders decreased from the downstream resin industries and product stock was sufficiently available, more significantly after the reopening of Shanghai port in China after three-month hiatus. The product's offtakes were seen moderate in the market during the quarter.
Europe
The European market witnessed a strong price trend for Epichlorohydrin in Quarter 2 of 2022, and the product's costs rose significantly by 18% from the previous quarter. In the H1 of the Q2, the feedstock Propylene prices plunged appreciably after inflation, and product production costs inclined upward steeply. From the mid-quarter feedstocks, costs stabilized and started decreasing. However, fuel and energy costs rose in the country due to the gas shortages, inducing cost pressure. Due to which product's prices rose slightly till the end of the quarter. The demand from the region's epoxy resin producers remained firm. At the same time, the product supplies were affected due to container shortages at the European port. During the quarter the product offtakes remained consistent in the market.
For the Quarter Ending March 2022
North America
In North America, the prices of Epichlorohydrin (ECH) were observed to be increasing in the USA during Q1 2022. So, the prices went up to 9.4% during the middle of the quarter, with prices hovering around USD 3126/ton-USD 3361/ton CFR New Jersey with a surge of 19.3% in the first quarter analogizing to the previous quarter. Due to the firm upstream Crude Oil futures, prices of all the value chain products, including propylene, have soared, triggering the ECH cost in the first quarter. Moreover, freight charges have witnessed an increase of 10% since the start of the month, which has triggered the price increase.
Asia Pacific
During the first quarter of 2022, the prices of Epichlorohydrin (ECH) fluctuated in India, where a decline of 4.2% was seen in the middle of the quarter. The prices were ranging around USD 2875/ton FOB Ningbo in the first quarter of 2022. Market sentiments have improved in this quarter with the increase in the buying momentum and fluctuating demand from the downstream. The price fluctuation in Epichlorohydrin has also affected the downstream Epoxy Resin prices in Asia. As Epichlorohydrin is majorly imported from China and Thailand, its values in India witnessed a significant surge in line with the rise in import prices. A trader revealed that although the offtakes of the product have remained stable in the domestic market, the international prices pressure has shown a significant impact on the pricing fundamentals of the product.
Europe
Europe observed a surge in the prices due to increasing demand from downstream coatings, adhesives, plastics, textile, paper, and inks, with prices rising to 19.3% in Q1 2022. The price was USD 2955/ton FOB Hamburg at the beginning of the quarter, with a rise in upstream propylene and hypochlorous acid in Europe Cost pressure from upstream Natural gas could further push the price due to ongoing war between Russia and Ukraine.The primary cause behind this uproar in pricing has been unplanned outages that resulted in reduced production and high levels of demand in the ethylene market as downstream polyethylene intake are going strong.
For the Quarter Ending December 2021
North America
US Epichlorohydrin (ECH) market had been struggling to gain momentum since late July as do most of the downstream value chain. Demand had further deteriorated during Q4 from the Q3 levels. Upstream propylene prices too have recorded lower average prices during Q4 of FY21. Downstream epoxy resin contracts for December were heard to be lower than the November prices. Spot offers for ECH around Texas were heard to be as low as USD 2750/MT. Production hassles faced during the winter and hurricane seasons had slowly subsided by November of FY22. Imports from East Asia were hard to come by owing to exorbitant freight charges during the months of November and December.
The outlook for Q1 of FY22 remains bullish as upstream propane and in turn propylene prices are expected to put an upward pressure on the prices of ECH. The winter demand for LPG is going to be the key driver for rise in prices of upstream propylene.
Asia
Chinese ECH market saw a continuous drop in prices week on week since the second week of November. The upstream propylene market made some marginal gains during the first week of December but was not enough to impact the prices of ECH as downstream Epoxy Resin demand was unable to make any improvement. The domestic prices fell by over 20% from the first week of November to the closing weeks of December. The spot price of ECH as of the last week of December was assessed at USD 2520/MT.
The Indian ECH market had seen a similar trend with Q4 prices reducing by 7% to 8% compared to the Q3 prices as assessed on spot offers at Mumbai depot. Upstream propylene offers too had reduced by volume by the first week of December. Downstream epoxy contracts for the month of December were being offered at anywhere between 6%-7% lower as compared to the November contracts. On the production front, Meghmani Finechem Ltd. Is set to become India’s largest Epichlorohydrin manufacturer with a 50 KTPA plant about to start operations with full capacity by Q2 of FY22 in an otherwise completely import dominant Indian market with a consumption of around 60 KTPA.
The outlook for Q1 of FY22 remain positive with spot offers picking up momentum by the first week of January itself in China where spot offers at Huangshan were assessed 2.5% to 3% higher than the last week of December prices.
Europe
Exports of Epichlorohydrin to North America from Germany and Netherlands had reduced in volume by the middle of October and consequently the deflated demand led to a series of price revisions in the domestic markets with spot offers seeing a 150 Euro/MT decline from the first week of November to mid-December. The January contracts offered by major manufacturers were on an average, 60 to 70 Euros/MT higher than the December contracts. Downstream epoxy resin demand remained sluggish for more than a month before the start of holidays.
Outlook for Q1 of FY22 remains positive with prices expected to improve by the mid-January period. Upstream propylene prices will in probability increase as, LPG demand during the peak winter season leads to an increase in feedstock propane prices. Also, the demand from downstream epoxy resin demand is expected to be higher in Q1 of FY22 compared to the last quarter.
The prices of Epichlorohydrin (ECH) soared in the North American region on the back of the consistent demand from the downstream manufacturers in Q3 of 2021. Hurricane Ida struck USA Gulf Coast in late August which took down nearly 40% of the US’ caustic-chlorine capacity affected the downstream chlor-alkali chain, further driving the ECH prices higher during the quarter. Additionally, rising crude oil prices further impacted the Epichlorohydrin pricing in the region.
The overall market outlook of Epichlorohydrin showed progress as ECH prices registered a marginal increment in the Asia Pacific during third quarter of 2021. As Epichlorohydrin is largely imported from China and Thailand, its values in India witnessed a significant surge in line with the rise in import prices in Q3 2021. A trader revealed that although the offtakes of the product have remained stable in the regional market, the international price pressure has shown a significant impact upon the pricing fundamentals of the product. Besides, increment in demand for the downstream epoxy resins amidst the ease in lockdown restrictions has also provided an edge to its market fundamentals during the quarter. Towards the end of Q3, the Chinese ECH domestic and the spot market transactions were somewhat weak. Offered quotations Epichlorohydrin in China dropped, and FOB Ningbo discussions were assessed at USD 2400 per tonne, in the last week of September.
During the third quarter of 2021, the prices of ECH observed a significant rise in the European region followed by the firm demand from the downstream paint and coatings industry. Demand for epoxy resin grew considerably during the quarter which has led to an increment in the pricing of ECH across Europe. In addition, high freight cost also strengthened the overall pricing across the region, suppliers struggled to secure the material as imports weakened due to soaring shipping charges and limited availability of containers.
