US EDC prices may rise on Dow shutdown - producer

01 July 2009 19:57  [Source: ICIS news]

HOUSTON (ICIS news)--US ethylene dichloride (EDC) prices could rise on tight supply, buyers and sellers said on Wednesday after hearing that Dow Chemical planned to permanently shut down EDC production at its Plaquemine plant in Louisiana.

“The closure will reduce further the EDC availability in a market that is already tight,” a producer said.

Market participants said cost was playing a major role in this scenario.

“The value is turning out to be non-attractive due to the drastic reduction in caustic price,” the producer added.

A co-product of caustic soda is chlorine, a key feedstock in the production of EDC.

Another market participant agreed that cost was a central factor, but said the EDC market could loosen if carbide-based polyvinyl chloride (PVC) producers in China ramp up production.

“The capacity loss would definitely pull the string [on a] already-tightened market,” a source said. “However, if major EDC exports end up going to Asia, given the increasing ethylene price, the carbide method would soon be back in the China PVC market.”

A key concern in carbide-based production is the high costs of coal, salt, and power.

The US EDC spot price range was pegged at $355-380/tonne FOB (free on board) (€252-270/tonne) US Gulf, according to global chemical market intelligence service ICIS pricing.

Asian EDC prices have steadily climbed since the end of January on persistent supply tightness and rising feedstock costs.

Since 1 May, US EDC values have increased 63% from $215-235/tonne, according to ICIS pricing.

Dow could not immediately be reached to comment on market reaction.

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

($1 = €0.71)

For more on EDC visit ICIS chemical intelligence
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ICIS Copyright © Reed Business Information 2009

Author: Leela Landress
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