EDC Market to See Reflections of Reviving Demand in the Global Downstream PVC Industry
- 13-Sep-2023 4:43 PM
- Journalist: Bob Duffler
Expectations are high for a surge in bullish buying sentiments in the global PVC industry for September 2023 due to Ethylene Dichloride (EDC) prices. This optimism is fueled by an increase in contracts, the reduction of inventory stress, and hopeful forecasts for robust restocking activities.. Moreover, the escalation in the upstream Ethylene prices and increased crude oil future values amid tight supplies from Russia and Saudi Arabia caused a shortage of stocks for EDC procurement. Therefore, the dwindling inventory levels amidst increased input costs and constrained supplies within the context of strong downstream PVC demand fundamentals resulted in anticipation of a further rise in the EDC price trend throughout September 2023 globally.
In Europe, the EDC prices were stable in the first week of September 2023, as the regional players have been gradually returning from long summer holidays and opted for cautious buying activities in the downstream PVC-producing industry for September sales. In August, from the supply perspective, the EDC price trend is influenced by the rising crude oil future values coupled with the upward price movement of upstream Ethylene since the last week of August 2023. Additionally, the inflation pressure escalated the production woes across the regional market, and the ECB raised the interest rates for the last time to lower the impact of the inflationary pressures on the market this week. Recent data suggests that the UK construction industry has hit a standstill due to a surge in new orders impacting EDC usage among PVC manufacturers in the area.
The prospect of an increase in Ethylene prices for September 2023 has motivated EDC sellers due to lower inventory availability and the prediction of a continued escalation in global offers.
During August 2023, PVC demand for EDC in the United States remained low due to increasing uncertainties in PVC production run rates, primarily caused by supply disruptions from Hurricane Idalia and scheduled maintenance turnarounds in PVC. Additionally, export demand for EDC from the USA was influenced by rising freight costs, worsened by the low water levels of the Mississippi River. Furthermore, the US EDC market is bullish as crude oil prices gain upward movement amidst tight supplies, and PVC demand across the regional market is also strengthening in September 2023. The increase in crude oil prices was driven by producers' expectations of supply constraints in September 2023. Significantly, there was a 3% rise in Brent Crude November futures, while US West Texas Intermediate Crude (WTI) October futures saw a substantial growth of 9% within the same timeframe.
As per ChemAnalyst, there is a positive outlook for EDC prices anticipated for September 2023, driven by increased costs of upstream Ethylene and reduced production rates across the globe. From the demand perspective, the downstream PVC-producing industry is expected to play a role as a key factor driving higher costs of EDC in the upcoming weeks in the line of seasonal consumption.