EDC Prices Decline in APAC, Stabilise in Europe Amid Geopolitical Tensions

In the Mid of June 2024, Ethylene Dichloride (EDC) prices in South Korea fell by 6.1% due to lower ethylene prices, destocking, and weak demand. Meanwhile, in Europe, EDC prices remained stable despite declining ethylene prices, driven by geopolitical tensions, fluctuating oil prices, and tight supply due to low operating rates and slow imports.

The prices of EDC in the South Korean market dropped from USD 330/MT to USD 310/MT during the week ending June 14, 2024. This price decrease was primarily attributed to a reduction in upstream ethylene prices and an ongoing destocking process by sellers. Lower market activities by buyers also contributed to the decline in EDC prices. For the past few months, ethylene prices have been on a downward trend. The domestic ethylene market experienced subdued trading momentum, reflecting a weakened purchase appetite for materials. The adverse impact on market sentiment arose from a combination of bearish factors, including weak demand for EDC. Consumers preferred making need-based purchases due to a fall in orders from end-user industries, further contributing to the price decline.

Despite an upward demand for EDC from the downstream PVC industry within the domestic market, the consumption from the end-user plastic and packaging sector was subdued, deteriorating market sentiments for ethylene. Spot market transactions were average, as terminal firms showed limited eagerness to enter the market. Market players reported that feedstock naphtha prices had persistently declined amid adequate inventories and limited demand, resulting in low production costs for EDC in the domestic market and contributing to the downward trend in EDC price realization.

In the European region, the price of Ethylene Dichloride (EDC) remained stable during the week ending June 14, 2024, maintaining the same levels as the previous week. This stability persisted despite a decline in upstream ethylene prices, which followed similar trends in both European and APAC regions. Several factors played a significant role during this period, including geopolitical conflicts and output cuts. Despite these challenges, the availability of EDC remained stable, supported by low operating rates in the domestic market and slow imports from the US and Asian markets. This stable supply, coupled with limited cost pressure from feedstock, contributed to the stability of EDC prices in Europe. Overall, the balance between tight supply conditions and minimal feedstock cost pressure helped maintain EDC price stability in the European market, even amidst broader fluctuations in the ethylene market and global economic factors.

According to ChemAnalyst, EDC prices are expected to rise in the coming weeks due to anticipated hike in global prices of crude oil and naphtha, which are likely to drive up Ethylene prices and, consequently, EDC prices. This projected price increase will also be attributed to anticipated reductions in EDC production, to be driven by expected increased demand and high trading activity. The current geopolitical situation is expected to further support the likelihood of rising prices. The downstream PVC market, which has shown strong demand in recent weeks, is predicted to continue this trend. In China, EDC prices are forecasted to follow an upward trajectory due to anticipated cautious downstream demand and a focus on on-demand procurement.