Asia EDC rises as lack of deep-sea cargoes tightens supply

16 March 2009 03:14  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian ethylene dichloride (EDC) rose last week on the back of tight supplies despite subdued sentiment in the downstream vinyls markets, traders said on Monday.

A 5,000 tonne cargo for April arrival was reportedly sold late last week to a Chinese polyvinyl chloride (PVC) producer at $270/tonne (€207.9/tonne) CFR (cost and freight) northeast (NE) Asia, about $30-40/tonne higher than the levels heard for March-arrival cargoes.

A dearth of deep-sea cargoes from the US was the main factor pushing up Asian EDC prices, traders and producers said. Poor caustic soda demand had forced US chlor-akali producers to suppress their chlorine production rates and in turn, their production of EDC.

Meanwhile EDC demand in Asia remained fairly strong due to attractive profit margins from other downstream products such as VCM and PVC, traders and producers said.

Last week, prices of PVC exports from China were assessed at just over $650/tonne FOB China, down almost $50/tonne from the levels seen in February. However, prices are still more than enough to cover the cost of manufacturing PVC from EDC, buyers and sellers said.

But persistent sluggish demand for PVC downstream products and high inventory levels among some EDC buyers in China could put the brakes on the recent rise in EDC prices, a Chinese vinyls producer said.

($1 = €0.77)

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By: Ng Hun Wei
+65 6780 4359



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