US Ethylene Carbonate Prices Soar as Upstream Costs Surge amidst Supply Constraints

US Ethylene Carbonate prices have been on a continuous uptrend since early August 2024 due to rising cost pressures. Upstream Ethylene prices in the US market experienced a notable increase, recently. Factors such as inflationary pressures, fluctuations in energy prices, and global market uncertainties contributed to the price volatility. The sharp rise in Ethylene prices is expected to impact industries dependent on it, as Ethylene is a key raw material for producing various chemicals including Ethylene Carbonate. Increased production costs for Ethylene-based products such as Ethylene Carbonate are leading to higher prices for end customers.

By the end of July, the spread of Mont Belvieu and Choctaw ethylene prices peaked. This tightening is attributed to logistical issues between Texas and Louisiana, which have exacerbated supply constraints in Louisiana, consequently pressuring the Ethylene Carbonate market. Nova Chemicals reported an unplanned outage at its ethylene cracker in Geismar, Louisiana. The outage, coupled with power disruptions from Hurricane Beryl, caused spot prices to rise for both locations. With hurricane season still ongoing, there is concern about potential weather-related production impacts in the US Gulf Coast. This has led to higher costs of Ethylene Carbonate.

North America gradually climbing the ladder to become a major battery production hub, crucial for advancing the global energy transition and boosting the region's Ethylene Carbonate market. Encouraged by US government support and their own expansion goals, automakers have pledged over USD 100 billion in new investments for EV development and production in the country over the coming years. In July, the Department of Energy announced USD 1.7 billion in funding to modernize and convert traditional auto manufacturing facilities to produce EVs and their components. Battery manufacturing is also experiencing a significant investment surge, with approximately USD 50 billion allocated to battery production facilities across the continent through the end of 2024. Companies like Panasonic, LG Energy Solution, and Samsung SDI are either establishing or expanding their operations, which is expected to support a total battery production capacity of 1 TWh by 2030.

However, in both Europe and the US, the raw materials for lithium-ion battery manufacturing including Ethylene Carbonate continue to grapple with challenges in ramping up production due to nascent industrial performance. To reduce reliance on Chinese supply chains, both regions are implementing policies to improve energy security for battery materials including Ethylene Carbonate.

Electric vehicle sales have decreased recently, however, the speed of descent has slowed down. According to the sources, US customers purchased 122,997 plug-in vehicles in July, including 100,677 battery electrics and 22,329 plug-in hybrids. This represents a 1.2% decline from the same month last year. However, EV sales surged 11.3% in the second quarter of 2024 compared to the previous year, reaching a record high of 330,463 units. These figures suggest that the market players are optimistic about future endeavors, which will benefit the battery raw materials including Ethylene Carbonate.

As per the ChemAnalyst pricing intelligence, the prices of Ethylene Carbonate are anticipated to remain elevated in the upcoming weeks as escalating Middle East tensions continue to pressure the upstream markets.