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Editor: Stuart Moir, stuart.moir@icis.com
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Producers of epoxy resins warned firming feedstocks could lead to further major hikes this quarter.
After January’s €100/tonne increase, producers said they were trying to implement a €100-150/tonne rise in February due to the tight bis-phenol A (BPA) market. European BPA contracts for January were assessed at €1,100-1,220/tonne FD NWE this week, up by €60-120/tonne from the previous month.
Suppliers said they could not continue without improving margins and that even big customers could feel the effects. However, most buyers did not think this was the case and expected rollovers.
One buyer said it would depend on how big the customer was and how flexible it was in being able to switch suppliers, with the average increase being around €50/tonne for February. One trader did state, however, that producers were making a consistent and concerted effort to push the price up and not competing for market share.
This, though, was before news that propylene was settling up €85/tonne for February, and producers of epichlorohydrin (ECH) reported they would pass the majority of this increase onto their customers.
ECH producers stated they usually pass on 50-70% of the propylene price hike onto their customers but that these figures probably wouldn’t enter discussions before March’s contract negotiations.
Both producers and buyers of epoxy resins thought that the effects of this wouldn’t be seen in the market before Q2, but acknowledged that when they hit they could be severe.
There was also less material coming in from Asia, with supply tight and prices going up a further $100/tonne this week to $2,100-2,200/tonne FOB NE Asia. According to market players this was giving even greater scope for price hikes among European producers.
One buyer did state, however, that those suppliers and traders who made deals for Asian material eight or nine weeks ago on lower prices were only getting their product now and so could undercut the rest of the market.
Demand was said to be steady and there were no reported issues with supply.
$1 = €0.71
This week on ICIS news ( www.icis.com):
26-Jan-10 11:03 Initial Europe February propylene settles up €85/tonne
22-Jan-10 23:59 Europe January bisphenol A up €60-120/t on benzene hike
22-Jan-10 12:04 Spolchemie’s finances stabilise as it faces increased costs
