Quarterly Update on Global Methylene Dichloride (MDC) Market
For the Quarter Ending June 2021
During the second quarter of 2021, Methylene Dichloride (MDC) supplies in the North American region showed improvement over the first quarter as manufacturing units picked up around the US Gulf coast which had largely been impacted by the winter storm Uri. The resumption of several production units and ample production of Methanol kept the upstream availability sufficient to meet production requirements. Offtakes from the downstream refrigerant industries surged amidst the peak demand season during the second quarter. The prices of Methyl Dichloride (MDC) were slightly on uptrend taking cost support from the upstream Methanol and Chlorine.
Methylene Dichloride (MDC) pricing trend in the Southeast Asian region remained soft amid sufficient inventories of the product in the domestic market. The market sentiments across India were weighed under slow offtakes due to reduced industrial consumption amidst the lockdown restrictions to contain the spread of second COVID wave in India. Furthermore, ample availability of upstream Chlorine kept the raw material prices for the Indian producers at ease. Ex-Works Ahmedabad (India) Methylene Dichloride prices was assessed at USD 728 per tonne in June. Whereas in China, supplies were curtailed due to some maintenance turnarounds. Jinmao Chemicals remained on a turnaround in mid-April, whereas Dongyue Chemicals was heard operating at 60% efficiency due to ample product availability. Demand in the Chinese domestic market improved towards the end of Q2 as offtakes from the refrigerant industries peaked with the arrival of summer season.
Methylene Dichloride (MDC) supplies in the European region improved with improved production rates of feedstock Methanol. Furthermore, the market outlook in term of supply was supported with the better import volume from the USA. Demand was bolstered as enquiries from the downstream refrigerants industries surged specially from the Mediterranean region, while observing the seasonal demand throughout the quarter. Some reported tightened availability of Methylene Dichloride due to shortage of shipping containers and soaring freight charges.
For the Quarter Ending March 2021
MDC supplies were extremely tight during the first quarter as a larger part of the USA MDC production was affected amidst freeze weather conditions in the Gulf region which forced several petrochemical and chemical plants to shut the production for more than two weeks followed by the limited availability of the key feedstock, which further weakened the exported volumes. Higher shipping cost to Asia added to reduced traded volumes. Demand surged as the offtakes were improved from the downstream pharmaceutical sector. Skyrocketing prices of Methanol proportionally impacted MDC prices in the North American region.
MDC supplies in the region were balanced throughout the first quarter of 2021, as several Chinese players ramped up production to meet rising domestic demand from the end use industries. While supplies remained curtailed for a significant portion of February due to Chinese Lunar New Year Holiday, offers were raised as demand from the regional buyers was lifted due to post holiday restocking. Surging Methanol further impacted the prices of Methylene Dichloride in China as Ex-Works Qingdao rates were around USD 688/MT in March.
During the first quarter of 2021, the European Methylene Dichloride market remained affected by curtailed supplies due to production issues in the northwest region amid severe cold weather and transportation lag. Significant reduction in imports and lack of feedstock led to shut down of some of the major plants for over a week in the region. With a strong recovery anticipated in the downstream automotive and construction industries, MDC consumption is likely to increase in the upcoming quarter.
For the Quarter Ending December 2020
Methylene Dichloride demand in Southeast Asia continued to strengthen following increased number of enquiries from buyers. In China too, demand for the product was heard paving its way back but it remained far below the pre-pandemic levels. Although demand in India remained stale but the prices witnessed a steep hike in the second half of the quarter, buoyed by its delayed imports due to congestion along several routes. Consequently, Methylene Dichloride prices in India were averaged at around USD 539 per MT in the quarter ending December 2020. Supply remained sufficient despite few turnarounds heard in China as manufacturers refrained from mounting up inventories to abate any hurt to their margins. In Northeast Asia, plant operating rates remained same throughout the quarter following no major change observed in the product demand and supply fundamentals.
Since a significant amount of Methylene Dichloride is imported from Europe, several maintenance turnarounds and unprecedented increase in the freight charges limited the supply of Methylene Dichloride in the North American market and led to a steep increase in its prices during the quarter. Demand also witnessed prominent recovery from solvent and pharmaceutical applications but still remained way below pre pandemic levels. Container shortage exacerbated the supply crises in the region and consequently laid a direct influence on its prices. However, traders remained optimistic that the supply imbalance would surely reduce by the end of February.
Supply of Methylene Dichloride in the European market remained tight in Q4 following appreciable recovery in demand against several production issues in the first half of the quarter ending December. Increase in freight rates and high feedstock cost considerably affected the supply from its major exporter-China. Olin Corporation announced a maintenance turnaround at its Europe plant in December which further tightened the domestic supply for few months. Demand for Methylene Dichloride witnessed a substantial recovery in the second half of 2020 backed by its increased consumption from the pharmaceutical industry.