Epichlorohydrin (ECH) prices in Germany experienced a consistent decline throughout December 2024, primarily driven by weak demand from the downstream paints and coatings sector. This downward trend persisted despite a surge in December prices from Asian manufacturers, who were facing tight market supply conditions. European traders, however, maintained a lower bidding strategy during the month, exerting downward pressure on ECH prices in the German market. This discrepancy between the pricing strategies of Asian and European players ultimately contributed to the observed decline in ECH prices in Germany during December 2024.

Germany: The ECH market witnessed a continuation of the downward price trend observed in November, with a 1.4% monthly decline in December 2024. This price erosion was primarily attributed to a significant weakening in demand from downstream consumers.

The European ECH market experienced a notable slowdown in spot activity during December. This subdued market activity was largely driven by a general slowdown in economic activity as the winter season approached. This seasonal downturn significantly reduced demand for goods from the downstream paints and coatings industry, a major consumer of ECH.

Furthermore, the overall market sentiment was negatively impacted by sluggish demand from the construction sector. This tepid demand from the construction industry prompted a cautious trading approach among market participants. Many players adopted a destocking strategy, aiming to reduce their inventory levels before the implementation of potential tax changes. To facilitate this destocking process, market participants resorted to offering significant discounts, further exerting downward pressure on ECH prices.

While logistical challenges, such as increasing congestion due to rail car shortages, could have potentially supported higher prices, their impact was overshadowed by the prevailing bearish market sentiment. The combination of weak demand from key downstream sectors, cautious trading behavior, and aggressive destocking efforts ultimately resulted in a continued decline in ECH prices in the German market during December 2024.

China: However, the ECH supply in China remained tight due to several production shutdowns which created a shortage of spot goods in the market. Moreover, the rise in the feedstock Propylene prices has further surged the production costs. The decrease in supply, coupled with the ongoing maintenance activities at multiple production enterprises, has led to a tightening of the ECH market which surged the offered quotations for ECH during December 2024.

As per ChemAnalyst, the ECH prices in the global market are expected to surge in January 2024 amid the start of the new year might renew the new orders from the downstream construction market due to restocking activities.