In October, China's epoxy resin market weakened because of lower BPA and ECH costs and sluggish downstream demand. In this case, some producers limited their runs or shut down their units, thus dragging down epoxy resin production to 153,200 tonnes, with a capacity utilization rate of 44.94%.
Production and Capacity Utilization (Jan-Oct, 2023)
Source: OilChem
Owing to decreased BPA and ECH costs, a result of weak downstream demand at the period when traders were pessimistic due to the Israeli-Palestinian conflict, epoxy resin prices fell to approximately Yuan 13,500–14,000/tonne in October. Without a sufficiently rapid improvement in in downstream demand, some epoxy resin producers restricted their runs or closed down their facilities in order to prevent losses and inventory risks, shrinking epoxy resin production.
Nine of China's fifty-five basic epoxy resin producers have suspended operations as of the end of the month, and numerous more reduced their operating load. As a result, the industry's capacity utilization rate dropped 4.06 percentage points to 44.94% in October from 49% in September, and epoxy resin production dropped 3.16% month on month.
In November, China's epoxy resin industry is expected to decline further in terms of both production and capacity utilization. Producers' capacity utilization rate is expected to below 45.17%, and the nation's production is not more than 150,800 tonnes.
This is because, in the current situation where lower transaction prices have slowed down sales and resulted in high inventories, certain plants are likely to reduce their operating load or cease operations. In addition, two Anhui units won't start up again until December, and a Zhejiang factory has unstable production. Next month, it's important for market insiders to closely monitor the operational status of upstream and downstream units.
2022 vs 2023 Production and Capacity Utilization
Source: OilChem
Written by Todd Zhu, todd@oilchem.net
Edited by Navy Liu, liuchuanjun@mysteel.com
