Chinese EDC buyers cautious despite supply disruptions

26 February 2010 08:28  [Source: ICIS news]

SINGAPORE (ICIS news)--Supply disruptions have failed to lift sentiment among Chinese ethylene dichloride (EDC) buyers, whose confidence had been dented by falling feedstock values, traders and producers said on Thursday.

Earlier this month, a major EDC producer in Taiwan - which exports around 10,000 tonnes of EDC per month to China - had reportedly reduced its production levels to less than 70% due to mechanical problems and could take up to two months to resume normal operations.

However, traders said most Chinese buyers had retreated to the sidelines despite indications of supply tightness over the coming weeks.

 EDC prices were last week assessed stable at $480-520/tonne (€355-385/tonne) CFR (cost and freight) NE (northeast) Asia.

"We are more concerned with the falling feedstock [ethylene] values. Demand is also uncertain and we will rather wait to see how negotiations in the downstream vinyls sector will pan out first," a Chinese vinyls producer and EDC buyer said.

On Thursday, Asian ethylene prices were assessed at $1,260-1,280/tonne CFR NE Asia, down 8% from a
17-month high in early February, according to global chemical market intelligence sevice ICIS pricing.

On Tuesday, Asian downstream polyvinyl chloride (PVC) producers increased their benchmark offers into China
by $20/tonne to $1,040/tonne CFR China. Negotiations were ongoing for the same.

Market players reported that EDC demand from China’s non-vinyls sector had also dropped in recent weeks. The chemical is also used as a solvent in the pharmaceutical and pesticide sectors. Traders said concerns over
governmental regulations in these sectors had weakened buying interest.

"There are rumors that the government wants to track EDC usage in the non-vinyls sector very closely. This will mean more regulations and documentation work. Buyers are just waiting to see if there will be any announcement," an EDC trader said.

EDC is a potential carcinogen and can cause liver and nerve damage on chronic exposure, according to the US Department of Health and Human Services.

($1 = €0.74)

For more on EDC visit ICIS chemical intelligence
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By: Ng Hun Wei
+65 6780 4359



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