Margins touching near-zero figures, murky demand outlook and overcapacity are the problems that have plagued the epoxy resins market in 2013. Epoxy resins find major application in the electronics, automobile and construction industries. With demand not rising to the expected levels across the globe, there is a structural overcapacity in the market. The demand and supply gap started increasing in 2011 and reached the levels of 0.9 million MT in 2013. Free trade agreements (FTAs) and currency arbitrages worsened the situation as Asian players tried to capture the shares in western markets by selling at highly competitive prices.
Huge Capacity Additions in Asia – Huge capacity additions were witnessed in Asia, especially in South Korea. Total capacity in China and South Korea has increased from 1.5 million MT in 2011 to nearly 2 million MT in 2013. This can be attributed to an FTA that came into existence in July 2011. The FTA led to flooding of LER in the European Market by South Korean players, as the prices offered were highly competitive. The U.S. market is also facing high influx of low-priced LER from Chinese suppliers.