Price and market trends: Asia lures deep-sea methylene chloride on weak EU, US markets

21 June 2013 10:02  [Source: ICB]

Poor demand means European and US production heads to Asia. Meanwhile, India threatens anti-dumping duties

Asia looks set to attract more deep-sea flows of methylene chloride, as demand in the region is relatively stable compared with declining consumption in Europe and the US, raising concerns of a possible supply glut, market sources said on 11 June.

 Demand is being stripped out of European and US markets

Copyright: RexFeatures

Consumption of the chemical in Asia was at around 1.5-2m tonnes/year according to market observers and is expected to remain stable to firm, backed by the region's economic growth compared with its western counterparts, with the US still struggling to recover and the eurozone in recession.

IMPORT NEEDS
India is the biggest importer of methylene chloride in Asia, with consumption estimated at around 165,000 tonnes last year. About 20% of the total was imported, mostly from Europe and the US, a document from the Ministry of Commerce and Industry, Directorate General of Antidumping said on 4 April 2013.

But a threat of anti-dumping duty on imports hangs over the market, with domestic Indian producers complaining that European and US producers are selling methylene chloride at below production cost, they said. Whether India will re-impose ADDs on methylene chloride remains uncertain, but the possibility of a trade barrier being imposed is weighing on the market, sources in the market said. Previous ADDs on the material were rescinded in 2005, industry sources said.

India buys in bulk of around 200-1,000 tonnes/order, while other countries import methylene chloride in drums of around 200 kg/order.

Southeast Asia's and Africa's methylene chloride import needs, on the other hand, are being met by producers in the northeastern part of the region, with China as a major exporter.

Demand within the EU has declined in recent years, with a ban on methylene chloride-based paint strippers set in place in December 2010 because of the chemical's high toxicity, thus increasing the availability of spot cargoes that can be sold to Asia, industry sources said.

With more cargoes likely heading into Asia, industry players raised concerns about creating a glut that will push prices lower in this region. Methylene chloride prices in Asia are already being weighed down by declining prices of feedstock chlorine, which is a by-product of caustic soda.

Chinese chlorine prices were slated to fall due to a supply overhang caused by overcapacity in the country, a market observer said.

Chinese chlorine prices were down by yuan (CNY) 100/tonne ($16/tonne) at CNY600-800/tonne EXWH in Shandong when last assessed on Friday 7 June.

STANDALONE PRODUCERS
In Jiangsu, chloride prices were stable at CNY600-650/tonne EXWH. Outside of China, chlorine output is channelled to integrated downstream production whereas in China there are stand-alone methylene chloride producers as well.

In China, methylene chloride facilities are running at barely half their capacity given current oversupply and weak demand, industry sources said. Methylene chloride has its biggest application in paint stripping and removers, and adhesions, which together account for half of its total consumption in Asia, industry sources said.

Other applications include as a propellant in aerosols, solvent in pharmaceuticals, metal cleaning and finishing solvent, urethane foam blowing and as a reaction solvent for producing polycarbonate resin and photography film.

ICIS has launched the only dedicated weekly methylene chloride price report, which gives access to timely and accurate benchmark pricing information.

KEY FACTS

  • Asia expected to attract cargoes from EU and US
  • India is threatening to impose anti-dumping duties on the EU and US
  • EU demand has declined with a ban on methylene chloride-based paint strippers imposed in December 2010
  • China methylene chloride facilities barely running at 50% capacity given oversupply and weak demand
  • ICIS has just launched a weekly methylene chloride price report

By: Heng Hui
+65 6780 4359



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