Prices of EDC (Ethylene Dichloride) fell in the second Quarter of 2023 | ChemAnalyst

 

 

The price of EDC (Ethylene Dichloride) fell in the second Quarter of 2023, backed by several factors, including weak demand from the PVC manufacturing industry, lower feedstock Ethylene prices, and supply chain disruptions. The slowdown in residential construction in the United States contributed to the decline in EDC demand in the PVC industry. The decrease in sales and profit for the PVC producers, the challenging global economic environment, and macroeconomic factors weighed on the commodity performance this Quarter. In the H1 of Q2, the downstream PVC industry was affected by rising interest rates to limit inflation in the country. Furthermore, despite production issues faced by major producers, including Formosa Plastics Corp. USA and Westlake Corp., PVC demand remained. Conclusively, these restrictive financial conditions and inflation has paused the consumer purchasing power in various sector and influenced EDC price discussion in the US market. At the end of the Quarter, the US Department of Homeland Security (DHS) banned the inflow of Chinese imports of PVC to keep forced labor practices out of the US supply chain, and this ban impacted the EDC prices, and market players stabilized the prices towards the end of June.

 

 

 

According to the latest data, EDC (Ethylene Dichloride) prices exhibited a downward trend in the Quarter ending June 2023 in the APAC market. The market participants were concerned about the gloomy demand in the PVC production sector of the country. The inadequate revival of the economic condition in China deprived the consumer buying enthusiasm in the domestic market, and sluggish offshore trading activities further affected EDC’s pricing movement in this Quarter. Moreover, the volatility in the upstream crude oil prices and lower feedstock Ethylene supported the price decline for EDC in Q2. However, manufacturers opted to reduce production run rates in the face of bearish market transactions in the H2 of the Quarter. In the H1 of Q2, the downstream processing industry deteriorated following the Holiday season. Moreover, the export demand slumped, and rising interest rates weighed on the PVC industry offtakes across the regional market. Traders continued to experience oversupplied market since the Labour day Holidays in May 2023 and the drop in crude oil costs and feedstock Ethylene prices.

 

 

In Europe, EDC (Ethylene Dichloride) prices were low in the Quarter ending June 2023, backed by the lower offtakes in the downstream sectors, including the PVC manufacturing segment. The major factor influencing EDC demand in the PVC industry was a steep decline in construction offers and ample availability of inventories as interest rates continued to increase and weighed on consumer spending throughout the Quarter. The market players closely monitored market conditions and adopted strategies to navigate this period of decline amidst financial stress by reducing production rates, focusing on balancing costs and maintaining a stable supply chain. Meanwhile, the reduction in the EDC prices resulted from the lower feedstock Ethylene costs during this time frame. The slowdown in the global economic condition resulted from persistent repercussions such as restrained investment, increasing debt vulnerabilities, and shortages in funding in the regional market. It conclusively diminished PVC offers and high inventories are the major factors that impacted the EDC prices in the second Quarter of 2023. 

 

 

In the second Quarter of 2023, the price of EDC in Saudi Arabia experienced a downward trend. This was primarily due to reduced demand in the PVC manufacturing sector, which was affected by the festive season in April 2023. Although there was a slight improvement in construction activities in May, it was not significant enough to drive up demand from the PVC to impact the EDC prices due to the high supply levels. Furthermore, buyer confidence in Saudi Arabia declined towards the end of June 2023 due to sluggish offshore demand for EDC and a slow trading atmosphere following the EID holidays. The economic slowdown in the region also contributed to a decrease in purchasing enthusiasm and profit margins for manufacturers and traders. As a result, EDC prices in the region declined during the second Quarter of 2023. Meanwhile, the availability of cheaper ethylene, increased production rates, and rising employment rates prompted market participants to lower their prices in response to reduced input costs in Saudi Arabia throughout the Quarter.