Global Market Outlook on Epoxy Resins

The global epoxy resin market has a surplus capacity with more than 75 percent concentrated in Asia. The overall demand is expected to grow at 5.0 percent CAGR to reach 3.45 MMT by 2021.Hexion had planned capacity expansion at Tianjin plant in China during 2015. This plant is under construction and is yet to come online

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Demand Market Outlook

  • Increasing demand for adhesives, paints and coatings in the developing regions, like China, India, LATAM, etc., due to rising construction sector and increasing auto sales, is expected to drive the demand for epoxy resins 
  • Demand from the US and Europe is expected to grow from the waterborne composite applications in aerospace, marine coatings, and windmills in the coming future

Industry Best Practices

  • Large-volume buyers in NA and Europe prefer contract buying. Asian buyers, however, prefer spot to contracts.
  • CPG players opt for spot buying, as they procure less volume. Buyers in NA and Europe prefer low-cost Asian imports

Global Market Size: Epoxy Resin

  • The epoxy resin market value increased by 4–5 percent during 2016–2017, owing to increase in the price of BPA during the same period 
  • Asian countries are expected to witness high demand growth rates until 2022, driven by electronics, construction, and automobiles sectors
  • In NA and Europe, demand growth is expected from windmill installations

Global Capacity–Demand Analysis

  • Operating rates are expected to increase if no further capacity additions are announced in the near future. This will result in the market to shift the negotiation power from buyer to supplier.

Market Outlook 

  • The global epoxy resin capacity stood at about 3.53 MMT during 2017, and no capacity additions are announced for the future 
  • Operating rates are expected to increase from 70 to 75 percent in 2016 to 95 percent in 2022, if no further capacity additions are announced 
  • Currently, there is excess capacity in all the three regions 
  • Asia exports epoxy resins to Europe and NA, as and when there is a price arbitrage between the regions 
  • The global demand for epoxy resin is expected to witness a growth of about 5 percent until 2022, driven by Asia 
  • Asia represents almost 65 percent of the global consumption of epoxy resin, with China being the major consumer

Engagement Outlook

  • Buyers in Asia should engage on spot pricing mechanism for a maximum period of 1 – 2 years, owing to excess supply in the market
  • If no further capacity additions are announced, buyers are advised to enter into contracts, as the market might turn to tight