The weekly Ethylene dichloride report is a global report encompassing updates from Asia, Europe and the US.
Each region provides news and market intelligence on upstream developments, production, demand and any other influencing factors. All areas focus on spot prices with quotes published for NWE, USG and NE Asia. The data and commentary provides you with a reliable source of independent information essential for making business decisions within this area of the industry.
Updated to Q3 2020
Downstream PVC prices in the US rose amid production outages and resurgent demand, forcing integrated producers to keep more volumes of EDC for use in PVC production. As a result, EDC supply to Asia tightened. Producers in Asia were reluctant to supply spot material due to unfavourable netbacks because of low prices for chlorine co-product, caustic soda.
PVC demand saw a significant recovery in Q3 as coronavirus-related restrictions were eased and downstream construction and manufacturing activity improved. The recovery was better than expected, and led to an increase in demand for EDC.
European ethylene dichloride (EDC) supply fell late in Q3 as the global market tightened on the back of production issues and higher demand. Production issues in the downstream polyvinyl chloride (PVC) have increased global demand for EDC which has reduced the availability of import volumes into Europe. Prices have also become mostly non-competitive compared to domestic volumes.
European ethylene dichloride (EDC) demand rose in Q3r, as consumption from downstream markets rebounded. Construction demand rebounded after falling significantly in Q2 because of the effects of the coronavirus pandemic. The automotive market has also regained ground following the lifting of lockdowns in Europe. Consumption has not yet reached the level of the previous year with the most recent Eurostat statistics showing lower construction activity.
US supply of EDC declined during the third quarter as feedstock chlorine production slowed and derivative polyvinyl chloride production returned, but at constrained rates. Third quarter exports of US EDC declined as producers used as much of domestic production as possible to make PVC as value of the downstream derivative shot higher during the quarter. Westlake Chemical lost production of 670,000 tonnes/year when a hurricane knocked out power in Louisiana.
Demand for US EDC grew during the third quarter after collapsing during the second quarter coronavirus lockdowns. The demand growth was spurred by demand for downstream derivative PVC, which saw a V-shaped recovery as self-quarantined workers undertook home improvement projects to refurbish their stay-at-home surroundings. Demand also grew in global markets, but US EDC producers did not have enough supply to serve spot sales.
Updated to Q4 2020
Spot availability is likely to remain limited as a South Korean producer will undergo turnarounds at its plants in Yeosu and Ulsan in Q4. A boom for downstream PVC means that integrated producers in the US are likely to hold more EDC volumes for resin production. The tighter supply conditions may be relieved by a Taiwanese producer’s sales tender for 10,000 tonnes per month, subject to market conditions.
Buyers, particularly from southeast Asia, are expected to continue restocking from a limited pool of suppliers, as construction and manufacturing activity improves for downstream PVC. Demand from China may be muted as some buyers restocked at more competitive prices earlier in the year.
European ethylene dichloride (EDC) supply is expected to remain mostly flat in Q4. Some shutdowns originally planned for earlier in the year may be rescheduled for Q4 as a result of an easier logistical situation, but further details were not available. Global availability has been tightened by higher demand in Q3, and it is likely that downstream demand will fall in Q4 in line with seasonal trends.
European EDC demand is expected to fall late in Q4 in line with typical seasonal trends. Demand typically falls in December because of the holiday season in Europe. In addition, European countries are showing higher numbers of coronavirus cases which could create the risk of local lockdowns in the future. However in the short term the global market is tight and high prices of downstream polyvinyl chloride (PVC) are likely to support consumptions of EDC.
Supply of US EDC should grow during the fourth quarter as Westlake Chemical is expected to restart its 670,000 tonne/year unit in Louisiana knocked out of commission by Hurricane Laura in late August. That restart is expected during October and will add appreciably to US supply and US PVC output for the fourth quarter. Supply should also return on Formosa Plastic’s return to production, though that situation is not clear.
Demand for US EDC is expected to remain stronger than is usual seasonally as pent-up demand from months of constrained supply is addressed. Market participants expect that low interest rates will continue to fuel home construction, refurbishment and sales and keep demand for derivative PVC elevated until winter weather restricts construction activity. Home improvement activity is also expected to continue to add a level to demand not often seen.
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Ethylene dichloride (EDC) is a clear, colourless, oily liquid with a sweet, pleasant chloroform-like odour. It is highly volatile, toxic, flammable and miscible with chlorinated hydrocarbons and most organic solvents. It reacts violently with aluminium, alkali metals, alkali amides, ammonia, bases, strong oxidants and attacks many metals in presence of water.
Around 95% of EDC is used in the production of vinyl chloride monomer (VCM), nearly all of which goes into polyvinyl chloride (PVC).
Other outlets for EDC are chlorinated solvents such as ethyleneamines, trichloroethylene, vinylidene chloride and trichloroethane. It is used as an intermediate in the production of perchloroethylene (tetrachloroethylene) and as a catalyst in hexachlorophene production.
EDC has been used as a solvent in the textile, metal cleaning and adhesives industries. Solvent markets tend to be mature due to environmental pressures to reduce emissions and declining in the case of perchloroethylene.
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