EDC (Methylene chloride): how to interpret the intensified contradiction between supply and demand in the market

Recently, the domestic Methylene chloride market is weak and stalemate, the enthusiasm of buying follow-up is not high, the information of on-site trading is flat, and the offer of manufacturers is temporarily stable and wait-and-see.

The quotation of the main downstream PVCs in July was postponed, and most market participants stayed on the sidelines. In the CFR Far East Asian market, the price of EDC is stable at US $615 / ton and the price of VCM is stable at US $1000 / ton. The weak demand in PVC industry has hit the sentiment of EDC and VCM, and the buyer said that the uncertainty in infrastructure industry is the main reason. Although the blockade was lifted in Shanghai earlier this month, the increase in covid-19 cases and concerns about China's new restrictive measures pushed market participants to wait and see. In the absence of willingness to buy, prices also fell. In addition, as several Indian states enter the monsoon season, PVC exports to India, the main buyer, are expected to decline. This led to a lack of confidence in the EDC and VCM markets. Some participants said that in order to attract buyers, the quotation must be reduced.

In the future, after the new domestic production capacity is added to the market, the supplier's shipping pressure may increase. Although Shanghai chlor alkali planned maintenance or formed a positive hedge in July, the weak performance of the main downstream PVC may not be able to support the EDC market to maintain a high range. The contradiction between supply and demand in the medium and long-term market may be further intensified. Some operators expect that the operating range of the EDC market will move down and then pick up the market demand in such directions as solvents to alleviate the contradiction between supply and demand. It is expected that the domestic EDC market will continue to be weak and volatile in the second half of the year, and attention will be paid to the changes in supply and demand structure.