For the Quarter Ending June 2021
Repercussions of freezing fallout in the Gulf of USA in mid-February, continued to disturb the market sentiments in this quarter as well. Due to the disrupted production activities in feedstock plants, prices of several downstream products including Ethylene Dichloride increased effectively, which later declined in June with improvement in supply activities. However, following the revival in economic activities, demand for Ethylene Dichloride remained firm throughout the quarter from downstream Poly Vinyl Chloride (PVC) sector, which also supported its prices in USA. Therefore, a consistent rise in prices of Ethylene Dichloride was observed, which settled at USD 660/MT in the second half of May in Texas.
Overall demand for Ethylene Dichloride remained modest in APAC region, while the prices rose effectively in China due to soaring feedstock prices. In China, prices of Ethylene Dichloride rose effectively during the quarter, supported by fuming feedstock Ethylene prices amid firm demand and inadequate availability. While in the Indian market, demand for Ethylene Dichloride from downstream Vinyl Chloride Monomer (VCM) manufacturers remained muted, due to resurgence of pandemic in the country. Sudden implementation of movement restriction reduced the consumption of PVC in the country, which eventually led to a decline in demand for upstream Ethylene Dichloride. Thus, prices dwindled in the month of May and reached USD 684/MT in India.
An astonishing rise in prices of Ethylene Dichloride was observed in the European region during this quarter. The demand fundamentals showcased sturdy growth from the downstream VCM and PVC manufacturers, backed by the improvement in economic activities than the previous quarter. Besides, critical shortage of feedstock Ethylene from USA also supported the steep rise in its prices. In the meantime, traders expected some cargoes from other regions like Asia and Middle East to counter this steep rise in these commodities.
For the Quarter Ending March 2021
Stable demand amidst acute shortage, led the EDC prices to follow upward trajectory across the region during this quarter. Winter storm across USA gulf coast disrupted the production activity of several Ethylene Dichloride (EDC) manufacturing units which caused raw material shortage for the production of downstream chemicals like VCM (Vinyl Chloride Monomer) and PVC (Polyvinyl Chloride). Several plants including that of OxyChem with the capacity 680 KTPA EDC and Olin Corp. with EDC capacity 748 KTPA etc. remained idled during this time frame due to this climate calamity. Hence the prices rose effectively high by more than 30% and settled around USD 550/MT by the end of March.
The Asian market had fair demand for Ethylene Dichloride (EDC) but the supply varied country by country, hence the prices too fluctuated with demand supply fundamentals. In the Chinese market, prices showed significant variations during a week, with FOB offers hovering around USD 780/MT during mid-February. While in the Indian market, prices showed consistent growth, as the demand remained firm from the domestic market but reduction in imports of raw materials from USA and Europe created product shortage. Price of EDC rose by 44.6% since January to settled at USD 735.7/MT during March.
Europe encountered significant shortage of feedstock Ethylene, which was having high demand from other segments like Polyethylene, during the first quarter. Imports from USA were reduced under rare climatic conditions, which affected the availability of raw materials (like Ethylene) and EDC in the region. These factors lead to a sharp rise in the price of EDC across the region. In addition, imports of EDC from the Middle East were also heard to be halted due to force majeure at a major producing plant worth capacity of 890 KTPA of EDC.
For the Quarter Ending September 2020
PVC prices in the Asian market rose amid tightened supply due to production outages across the US battered by a series of storms and hurricanes. Buoyant demand forced Asian PVC producers to keep more volumes of EDC for captive use. As a result, EDC supply within Asia remained tightened with offers largely raised above USD 230 per tonne CFR Southeast Asia. Buyers, particularly from Southeast Asia, saw a significant recovery in Q3 as coronavirus-related restrictions were largely eased and downstream PVC demand from construction and manufacturing activity was seen regaining the lost momentum.
The European Ethylene Dichloride (EDC) demand rose as the consumption by the downstream PVC manufacturers rose on the back of rebounding construction demand which had tumbled significantly in Q2 because of the dented economics. Lack of export volumes as inflows from the US remained largely nil triggered a sharp surge in the regional pricing. Traders maintained the margins low as the demand is yet to reach the pre-pandemic levels amid fears of second wave triggering fresh lockdowns in several states. FOB NWE EDC prices were assessed around USD 350 per MT levels, extending significant gains observed on Q-o-Q basis.
The American EDC market remained highly dynamic throughout Q3 2020 with regional producers observing a sharp pick-up in the buying behavior in response to the pent-up PVC demand, especially from the Asian markets. Power outages due to Hurricane Laura delayed start-ups of several Chlor-Alkali units in Lake Charles causing tightening in both domestic and export supply. Olin, the world's largest Chlor-Alkali producer, was heard temporarily idling Chlor-Alkali plants to manage costs and inventories. Formosa Plastics USA declared force majeure on its PVC manufacturing unit in August after an upstream chlor-alkali unit remained shut for longer than planned, causing potential shortage of EDC stocks. EDC Prices took off from the ground levels after witnessing a historic plunge (about 70%) during Q2 2020.