Lee Dong-wook, a research analyst at IBK Securities, noted on the 15th that the regional epoxy chlorohydrin (ECH) has approached $1,000 per ton, the highest since October 2022. The ECH spread is calculated by subtracting the price of the raw material, propylene, from the ECH price.
The main reason cited is the supply issues related to glycerin, which is an alternative raw material. In Europe, there is a supply shortage, while in the United States, demand is increasing, as the Donald Trump administration has announced tariffs of 24% and 32% respectively on Malaysia and Indonesia, the major exporting countries of glycerin.
The price of propylene, the raw material for ECH, is also stabilizing. The analyst stated, "China's oversupply of propylene continues, and the United States is resuming liquefied petroleum gas (LPG) exports to China, making it stable."
Additionally, the low tariff rates applied by the U.S. and Europe on domestic epoxy resin, along with the rebound in epoxy resin production, and the permanent closures of aging ECH plants were noted as factors behind the expansion of the ECH spread.
This could be a boon for domestic ECH production corporations. As of last year, the production capacities were 133,000 tons for LOTTE Fine Chemical and 25,000 tons for Hanwha Solutions.
The analyst mentioned, "LOTTE Fine Chemical, a major ECH producer, has completed regular maintenance in the first half of this year and is increasing production considering revenue improvement."