NE Asia EDC at 13-month high; breaches $300/tonne on short supply

SINGAPORE (ICIS)–Northeast Asia’s ethylene dichloride (EDC) prices have climbed to a thirteen-month high – above the $300/tonne mark – and may remain supported in the near term because of short supply.

For the week ended 1 June, EDC prices rose to an average of $305/tonne CFR (cost and freight) NE (northeast) Asia, up by $35/tonne from the previous week, ICIS data showed.

While an uptrend has been observed since January 2018, spot prices had stayed below the $300/tonne mark for the past thirteen months. The current price was last seen in 12 May 2017, ICIS data indicated.

Regional lack of availability and strong demand for solvent end-use were main factors keeping the EDC market supported, market sources said.

Unconfirmed deals as high as $350/tonne CFR NE Asia have been concluded in China for solvent end-use since April, they said.

Last week, two spot deals of $330/tonne CFR NE Asia with volumes of 5,000 tonnes each were bought by a Japanese integrated vinyl producer, which is currently conducting a turnaround at its EDC plant.

Polyvinyl chloride (PVC) producers, which use EDC to produce PVC feedstock vinyl chloride monomer (VCM), have been reluctant to pay at prices above $300/tonne CFR NE Asia.

Roughly 95% of EDC is used in the manufacture of VCM, nearly all of which goes into PVC. Most EDC plants are integrated with VCM production.

“This is [the] first in long time that vinyl buyers accepted [prices] higher than $300/tonne CFR NE Asia,” said an EDC producer.

Even though supply is tight, most other PVC producers are choosing not to engage in spot EDC trade, citing sufficient inventory levels until US cargoes arrive in July.

“I can understand [the] tight supply [situation] but enquiries are also limited”, said a Japanese trader.

Spot regional supply has been tight since early this year because of the turnaround season in Japan in May-June, and with US supply being diverted away from Asia to Brazil, following an outage at Braskem’s chlor-alkali plant.

There were buying enquiries from Braskem last week for US spot EDC, but recent protests in Brazil might have dampened its buying interest.

Focus article by Jonathan Chou

Picture: Polyvinyl chloride (PVC) pipes. Ethylene dichloride (EDC) is used in the manufacture of vinlyl chloride monomer (VCM), nearly all of which goes into PVC. (Source: imageBROKER/REX/Shutterstock)