How tight Ethylene supply impacting the prices of Ethylene Dichloride globally

Ethylene Dichloride (EDC) prices surged due to the disruption in supplies of feedstock Ethylene in the global market in March as Ethylene Dichloride is prepared by Ethylene and Chlorine. Insufficient supply of raw material increased the production cost of Ethylene Dichloride and created pressure on the downstream enterprises to fulfill the desired market requirement. Furthermore, bullish upstream energy values also influenced the prices of Ethylene Dichloride in Asian countries.

Ethylene Dichloride prices are majorly influenced by the feedstock Ethylene and Chlorine market. The external Ethylene market showed an overall upward price trend in Asia due to the tight availability of product in the region. As crude oil prices rose throughout March, refineries using Naphtha as cracker feed have come under pressure from exorbitant feedstock prices thus causing prices of Ethylene to rise by over 4% on an average compared to the last week of February.

Suppliers of EDC across the globe feel that the continuing ban on Russian Oil and Gas by the west combined with lagging production targets by the OPEC+ countries in their targets for production of crude oil could lead to refinery margins running in negative cash flows vis-a-vis Ethylene production till at least the mid-April period.

Moreover, the downstream Poly vinyl chloride (PVC) market was undergoing dynamic variations with multiple plant turnarounds lined up in April in Asia. CPC Corporation has scheduled to shut the cracker for maintenance in April 2022 in Taiwan. The production units are facing downtime because of maintenance work in the industries. The shutdowns of downstream industries of Ethylene Dichloride have ultimately resulted in surged prices of Ethylene dichloride.

The international oil price rose, and continued to rebound, mainly due to the recovery of global demand, which drove the upward trend of oil prices globally. As per ChemAnalyst, “the external price of feedstock ethylene will mainly rise in the future which will ultimately result in surged prices of Ethylene Dichloride.”