US EDC spot prices rise on ethylene, earthquake

12 June 2008 23:13  [Source: ICIS news]

HOUSTON (ICIS news)--Rising feedstock ethylene prices and the devastating 12 May earthquake in Sichuan province, China, drove the first price hike the US ethylene dichloride (EDC) market has seen in more than a year, market sources said on Thursday.

Industry participants said US producers selling EDC on the spot market raised prices by $40/tonne (€26/tonne) this week to $380-420/tonne FOB (free on board) USG (US Gulf).

US EDC spot prices were stable in the $340-380/tonne FOB US Gulf range since January 2007, according to global chemical market intelligence service ICIS pricing.

Nearly all the US EDC sold on the spot market is shipped to polyvinyl chloride (PVC) producers in northeast Asia that rely on EDC imports to maintain high production rates, sources said.

Although US EDC often moves into the region via Japanese chemical traders, most is ultimately used at PVC plants in China and South Korea. Regular shipments from the oil and natural gas rich Middle East have maintained stable EDC spot prices in northeast Asia for nearly 18 months, sources said.

However, producers said the earthquake in central China not only led to shutdowns at local EDC production facilities, but the reconstruction efforts also created a sharp increase in demand for PVC construction materials.

Adding to the upward price pressure, US ethylene contracts settled up 1.5 cents/lb for April and 2.5 cents/lb for May for a combined increase of 4 cents/lb, according to ICIS pricing.

Although the increased demand for EDC in China may only be temporary, producers said EDC spot prices could remain at their new levels, or move even higher, as long as the surging energy complex keeps feedstock ethylene prices aloft.

US EDC producers include Dow Chemical, Occidental Chemical (OxyChem), Formosa Plastics, Georgia Gulf and PPG Industries.

($1 = €0.64)

For more on EDC, visit ICIS chemical intelligence
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By: Greg Holt
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