Asia
The prices of ethylene dichloride (EDC) in northeast and southeast Asia were flat this week in view of limited market activity.
A 3,000 tonne parcel was heard sold at $440/tonne FOB Korea for August loading. The destination has yet to be specified.
In northeast Asia, the majority of selling ideas were heard at $460-470/tonne CFR China, with sporadic selling indications mentioned at $450/tonne CFR China. However, this failed to attract buying interest as buyers were insistent on their buying ideas at $420-430/tonne CFR China.
Buyers cited the prevailing weak downstream vinyl chloride (monomer) (VCM) and polyvinyl chloride (PVC) markets as the reason behind their reluctance to purchase EDC at higher prices.
Producers, on the other hand, were keen to maintain their price ideas on the back of higher feedstock ethylene prices. Although the PVC market has yet to show a clear rebound, prices were hovering at slightly firmer levels, which should provide support for EDC prices, according to suppliers.
Furthermore, prices of caustic soda, the by-product of chlorine which is used to produce EDC, have been declining since the middle of June. Thus, several suppliers are expecting a recovery in EDC prices as the EDC and caustic soda markets traditionally have a counter-cyclical nature.
In southeast Asia, prices were rolled over from the previous week as no firm bids and offers could be heard amid a quiet market.
Several buyers were heard to purchase cargoes on a contract or formula-pricing basis and their requirements were covered, resulting in subdued spot activity.
Malaysia’s VCM SB’s 400,000 tonne/year VCM plant has been shut since last week and will remain off line until the end of this month, a company source said.
Since VCM SB is a major importer of EDC in the region, its shutdown is expected to dampen EDC demand.
However, a significant impact on the EDC market has yet to be evident as the company was heard to have purchased an EDC parcel just before the shutdown, market sources said.
Downstream VCM prices were $5-10/tonne higher at $900-910/tonne CFR NE Asia, while PVC prices rose by $10/tonne to $1,100-1,110/tonne CFR CMP.
Americas
Sources looked for any potential loosening in the US ethylene dichloride (EDC) market for spot trade possibilities, as prices remained stable during the week ended 29 July.
A slight slack in downstream polyvinyl chloride (PVC) exports from the US was supporting hopes that more EDC would become available for the spot market.
This week, PVC prices appeared to be seeking a bottom as prices hovered in the upper $900s/tonne FOB USG to the low $1,000s/tonne FOB USG.
In addition, US EDC spot market participants are anticipating a bid by a major Brazil-based buyer.
One trader said it would likely be awarded late this week or early next week. No other details were immediately available.
In the US, Dow Chemical confirmed on 28 July that it closed its vinyl chloride monomer (VCM) unit in Plaquemine, Louisiana, in early July as previously announced.
The Plaquemine unit had a capacity of 680,000 tonnes/year, according to ICIS plants and projects. Dow announced the closure of its VCM operations in 2009.
Last February, Dow closed its Oyster Creek VCM unit just outside of Freeport, Texas.
A company source said the Plaquemine shutdown was not expected to change Dow Chemical’s merchant sales position on EDC.
In production news, a leak of EDC was noted by a Texas agency at Occidental Chemical’s (OxyChem) La Porte VCM plant.
The incident began late on 25 July when a leak in a tube caused EDC to leach into cooling water, according to the Texas Commission on Environmental Quality (TCEQ) filing. An estimated 460 pounds of EDC was leaked, according to the TCEQ.
An OxyChem spokesman said the company was unable to comment on specific production issues and referred to the filing for any details. It was unclear whether the incident affected production of VCM or PVC.
However, another US market participant noted that the amount of EDC leaked was unlikely to disrupt production.
The US chlor-alkali operating rate for June was 92%, slightly higher than May, according to the Chlorine Institute, an industry trade group.
June’s industry chlor-alkali output was 1.01m short tons (915,023 tonnes) of chlorine and 1.052m short tons of caustic soda. May’s chlor-alkali operating rate was at 90%.
Europe
No further business has been heard in the European EDC market in the last week.
Also, increases in the upstream ethylene contract price for August and slow demand in downstream PVC due to the summer holiday season means little activity is expected in the next weeks.
An increase of at least €10/tonne is necessary in order to pass the cost of higher upstream values, said a producer. However, buyers are unlikely to purchase material at those levels because of poor buying interest in the PVC market, it added.
Some suppliers expect market activity to improve in August as buyers attempt to secure material in anticipation of rising EDC costs after the summer holiday. However, no signs of recovery were apparent this week.
Pending further market activity, prices remain at $430-450/tonne FOB Western Europe, unchanged from last week.
Upstream, the European ethylene contract settled at €1,120/tonne FD NWE for August, up by €30/tonne from July. The increase was driven by firm feedstock and a better-than-expected outlook for demand. Spot numbers are rising and have reached the low €1,000s/tonne on the pipeline.
Downstream, European PVC demand remains weak because of both the approaching traditional end-user holiday outages in August and slowing macroeconomic conditions, which are limiting construction demand.
In addition, buyers had been holding off purchasing in June and July becasue of expectations of further price falls in August.
Nevertheless, with the upstream August ethylene contract price rising $30/tonne, PVC domestic prices are not expected to further decline in August, although poor demand could prevent producers from passing through the ethylene cost hikes until September.
($1 = €0.70)
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