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 Q1 2021
Global supply was adversely affected in Q1, as major producers in the US had most of their production shut in mid-February by a severe polar storm. Spot availability from Asian producers remained limited for most of Q1, as volumes produced largely went into the production of main derivative PVC amid record-high prices for the resin. Supply conditions tightened further in late Q1 as a Middle Eastern producer declared force majeure in late-March.
Demand in Asia was supported in Q1, as buyers in the region sought to restock in order to maximise their downstream PVC production, amid record-high PVC prices globally. Asian PVC producers have sought to fill in the global supply shortfall caused by production issues arising from the mid-February polar storm in the US. EDC buyers in Asia subsequently had to procure material from a limited pool of suppliers in Q1.
EDC availability fell in 1Q as global prices were high, limiting imports, and several producers carried out shutdowns or had production restrictions. Sources saw little spot availability and very few deals were carried out. The majority of material produced in Europe was structurally reserved for integrated producers or for long-term contracts.
EDC demand increased in Q1 on the back of higher global consumption for downstream products. Export prices for downstream PVC reached record levels following US production issues in February. which triggered higher consumption of European material. In addition, construction demand rose strongly as the market recovered from the effect of the coronavirus pandemic across much of the world.
Supply shrank sharply after the February freeze knocked out ethylene and chlor-alkali plants along the US coast. The freeze knocked out the entire production chain up and downstream of US EDC, including for derivative polymer PVC. Six weeks after the freeze, most production was still constrained on slow start-up of ethylene and chlorine plants.
Demand held steady at unseasonably high levels through Q1 on an unexpected boost in construction activity that drove strong demand for downstream derivative PVC. Demand for EDC to make PVC defied the usual winter slowdown, much of it on coronavirus factors. More people working from home and enjoying more disposable income from not eating out or driving or taking vacations drove rising rates of home improvement activity and low interest rates prompted more homebuying.
Updated to Q2 2021
Global supply conditions may ease in Q2, as integrated producers in the US have stabilised chlor-alkali operating rates. EDC and downstream vinyls production rates are also expected to stabilise. Nevertheless, deep-sea spot availability to Asia could be capped as integrated US producers may hold any excess EDC volumes captive into the production of main derivative PVC, amid global record-high prices for the resin.
Demand for EDC in Asia is expected to be supported as the downstream PVC sector approaches its peak demand season in Q2. Downstream PVC demand in Asia would likely pick up in Q2 on favourable weather conditions for pipe-laying and construction activities. Downstream PVC consumption is also expected to increase on robust spending on infrastructure, particularly in China. Overall sentiment is also positive on the prospects of economic growth in Asia, amid coronavirus vaccination roll-outs.
EDC availability is likely to remain stable in Q2. There are no significant capacity changes expected, with spot likely to remain a relatively minor factor as the majority of material is integrated into PVC production or tied up in long-term contracts. Global PVC prices may fall as availability slowly improves in the US, which is likely to increase the availability of imports in Europe.
EDC demand is expected to be mostly stable in Q2. The outlook for downstream products is relatively bullish as PVC prices are likely to remain high and strong growth is forecast for the construction industry. Spot demand is likely to remain a minor part of the equation but may receive a boost if there is an unforseen production problem in the PVC market.
Supply is expected to grow during Q2 from the tight supply in Q1 caused by the February deep freeze along the Texas coast. Plant restarts have been prolonged by damage caused by sudden shutdowns on the power outages caused by the storm. More normal production is expected near the end of May and supply and export balances restored by the start of Q3.
Demand for EDC to make PVC is expected to grow during Q2 on the build of activity toward peak construction season. Construction activity is the largest demand sector for PVC and it has been elevated for the past eight months. That is expected to grow on seasonal factors and the easing of coronavirus restrictions with the wide rates of vaccination and expectations of further opening of the economy. Stimulus spending and low interest rates will add fuel.
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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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