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"Axion's price forecasts help us allocate resources smartly and efficiently, predict price changes, and purchase PP at favorable prices. These reports save our internal team a lot of time and effort when analyzing pricing trends."
Sante Serrecchia, Ondaplast Administration and Purchasing Manager
Singapore (ICIS)-The EPDM market in Asia may have the potential to increase prices due to rising raw material costs, and as restrictions implemented to curb the spread of the coronavirus are relaxed, demand is gradually recovering.
When countries reopen their economies and global automakers restart factories in Asia, Europe, Latin America, and the United States, demand is expected to slowly pick up.
“We expect auto production to moderately increase from the current 30% operating rate to around 50% after June. We expect the price of EPDM to increase slightly in the next few months,” said a trader.
On May 13, the Asian Central Ethylene Norbornene (ENB) spot price rose by US$50/ton to US$1,350-1,550/ton CIF (Cost, Insurance and Freight) China, CFR (Cost) and Freight) Southeast Asia and India, according to data from Axioms.
In Asia, China and Vietnam have reopened their economies after successful early implementation of strict restrictive measures (including large-scale quarantines, blockades, border closures, transportation restrictions, and travel bans).
According to data from the China Association of Automobile Manufacturers (CAAM), China's auto sales reached 2.07 million in April, a year-on-year increase of 4.4% and a month-on-month increase of 43.5%.
According to market sources, the soaring price of raw material ethylene has also increased the upward pressure on the price of EPDM.
According to data from Axioms, on May 15, the price of raw ethylene soared by US$95/ton on a week-on-week basis to an average of US$565/ton CFR Northeast Asia. Due to the bullish market and tight supply in the Chinese market, the price of raw material ethylene in Southeast Asia hit a nine-week high.
At the same time, the supply of EPDM has tightened due to the closure of major EPDM plants in Asia, the Middle East, Europe and the United States and continued production cuts.
A major Asian EPDM supplier said: “We understand that several EPDM factories are reducing production or may be closed until June.”
According to market sources, PetroChina Jilin's EPDM rubber plant in northeastern China is said to operate only one 25,000 tons/year EPDM rubber production line. According to Axunsi's supply and demand database, Jilin has 3 production lines with a total production capacity of 85,000 tons/year.
According to market sources, other EPDM plants in China, including SK Performance's 50,000-ton/year plant in Ningbo and Mitsui Elastomer's 75,000-ton/year plant in Shanghai, were closed in mid-March and early April, respectively.
South Korea's SK Global Chemical (SKGC) is expected to idle its 35,000-ton/year plant in Ulsan in the second quarter of 2020, after the company planned to shut down its No. 1 naphtha cracker at the end of this year due to low profit margins.
Since EPDM rubber has excellent resistance to environmental factors such as ozone, ultraviolet (UV) and general weathering, it is used in various seals in the automotive industry and construction industry.
Typical applications are door and window seals, electrical gaskets, waterproof sheets, waterproof seals and wire coatings.
The global automotive industry is affected by the coronavirus pandemic.
In the past year, sales in the Indian auto industry have steadily declined, and almost all automakers had zero domestic sales in April.
The European Automobile Manufacturers Association (ACEA) said on Tuesday that passenger car sales in the EU fell by 76.3% year-on-year in April, the largest drop on record, as the auto industry was blocked in 27 countries.
According to the US Bureau of Economic Analysis (BEA) seasonally adjusted annual rate (SAAR), new light vehicle sales in the United States in April fell by nearly 25% month-on-month and by nearly 48% year-on-year.
Focus articles by Helen Yan
(Photo from Imaginechina/REX/Shutterstock: Chinese workers assemble electric cars)
Visit the Axioms automotive theme page to analyze the impact on the chemical market and link to the latest newsVisit the Axioms construction theme page to analyze the impact on the chemical market and link to the latest newsVisit the Axiom coronavirus theme page for analysis Impact on the chemical market Chemical market and links to the latest news
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