Ethylene Dichloride (EDC) Market Gains Pessimism Against Depressing Demand Outlook

Ethylene Dichloride (EDC) prices experienced a decline during the week concluding on December 8, 2023, in the European and Asian markets. The reduction in the prices has resulted from the diminished downstream consumption on a global scale in the line of economic challenges. Concurrently, enterprises faced weakened profit margins. The attempt to bolster prices by scaling back production rates proved unsustainable. This was exacerbated by heightened competitive pressures from increased import volumes in global markets, affecting not only the EDC market but also downstream industries like PVC. Additionally, a substantial decrease in EDC demand from the downstream industry contributed to downward cost pressure, further influencing the prevailing market conditions.

In Europe, the strategy of reducing operational rates to safeguard the profit margins of producers and traders proved ineffective in enabling suppliers to bolster their margins amidst competitive pressures from the import market. Conversely, despite production cutbacks, EDC price momentum consistently lagged due to subdued demand in the downstream PVC industry. In the week ending 8 December 2023, the European EDC market demonstrated stability on the lower values, prompting global importers to look forward to the Eurozone for new orders for December 2023. This approach aimed to decrease export prices amid the ongoing deterioration of market conditions and prevent inventory accumulation in the face of the year-end destocking period. Furthermore, there have been no indications of a revival in downstream PVC demand for several weeks in this quarter, amidst a significant reduction in the number of new construction projects in the European market.

The Asian EDC market remained subdued at the end of November 2023 and prices witnessed a decline in the week ending December 8, 2023, with no notable shift in the purchasing sentiments from the downstream PVC industry. Increasing inventories and a decline in demand across major Asian markets have led EDC prices to resume a downward trend. Reduced operational rates in downstream factories including the PVC industry have led to a lack of immediate demand for the product. As a result, regional buyers have been hesitant to engage unless significant discounts are provided by sellers on the prices.

As per ChemAnalyst, the prices of EDC are likely to remain on the downward side in the coming weeks due to weak demand in the downstream PVC industry. It is expected that the reflection of low inquiries across the global economy likely overweighs the EDC market situation for December 2023 in the line of destocking sentiments amongst the buyers. This week, the benchmark Brent crude futures stood at USD 78.03/bbl, marking a 2% decrease from the previous week and an 8% decline from the month before. Ethylene prices also experienced a drop in the past week suggesting a further dip in the EDC price dynamics.