Under internal and external troubles, the dichloroethane market is weak and difficult to change

1.
Dichloroethane product use and domestic market supply and demand

Dichloroethane is a kind of halogenated hydrocarbons, referred to as EDC, is an important chemical raw material, mainly used for the preparation of vinyl chloride and polyvinyl chloride (referred to as PVC), and also used in the production of ethylene glycol, adipic acid, ethylenediamine, tetraethyl lead, polyethylene polyamines and bibenzoyl, or used as a solvent for grease, resin, rubber, but also used as grain fumigant, extractant and grain pesticide, etc.
, widely
used.

In the process of preparing polyvinyl chloride by ethylene method, dichloroethane as an intermediate can either directly enter the downstream vinyl chloride plant, or when ethylene or chlorine raw materials are lacking, dichloroethane can be purchased as a supplement to the production of polyvinyl chloride raw materials; It can also be exported
as a product when the downstream vinyl chloride plant is stopped.
The schematic diagram of the product process flow of polyvinyl chloride prepared by ethylene method is as follows:

Figure 1 Process flow of ethylene polyvinyl chloride products

At present, there are 15 ethylene polyvinyl chloride manufacturers in China, with an annual production capacity of 6.
19 million tons, of which the export of dichloroethane enterprises are Shanghai chlor-alkali, Xinpu Chemical, Tianjin Dagu and Jiangsu Ruiheng four, and the supply is very unstable, only when the downstream plant is stopped, the supply accounts for less than 30% of the domestic demand, and the remaining 70% need to rely on imports
.
The main sources of dichloroethane imports are South Korea, the United States and Saudi Arabia, accounting for about 40%, 30% and 15% respectively, and other countries import about 15%.

At present, the PVC companies that mine dichloroethane are mainly Qilu Petrochemical and Ningbo Hanwha, and the source is mainly imported, accounting for about 70-80%, and the purchase volume is variable
.
In the first half of the year, Dezhou Shihua purchased some dichloroethane for the production of Jiang Zhongfa PVC, but in the second half of the year, due to the shutdown of the plant, it was not purchased
.

2.
Historical price trend and price spread performance of dichloroethane and polyvinyl chloride

Because the main downstream product of dichloroethane is polyvinyl chloride, so the correlation between the two is strong, the price trend is basically the same, since 2019, the overall performance is first down and then up, sharp rush and then shock downward trend, the overall change in the price difference between the two is limited
.
From the statistical point of view, since 2019, the price difference between the two has basically remained at about 4000 yuan / ton, the average value is 4065 yuan / ton, and only a few times have significantly enlarged or decreased, as shown in
Figure 2.

Figure 2 Comparison of PVC and dichloroethane prices

As can be seen from the figure, the price of polyvinyl chloride soared from the end of September to mid-October last year, and the price difference between the two quickly widened and exceeded 6,000 yuan / ton, and the highest rose to 7,850 yuan / ton
.
In mid-to-late December last year and July this year, due to the rapid decline in PVC prices, the price difference between the two narrowed sharply twice, the first time to 2700 yuan / ton, the second time to 2180 yuan / ton
.
After August this year, the decline in PVC prices slowed down, the dichloroethane market accelerated its decline, and the price difference between the two returned to a narrow range of about 3500 yuan / ton, and has not yet returned to the average value of 4000
yuan / ton.

3.
Prediction of the later trend of dichloroethane

01The downstream unit operates at low load, and the supply remains loose

At the end of October this year, Xinpu Chemical's 500,000-ton vinyl chloride plant in Taixing, Jiangsu Province was shut down for maintenance, and the sales volume of dichloroethane increased
significantly.
At present, the Xinpu chemical plant has been started, but limited by the main downstream Taizhou Liancheng polyvinyl chloride plant load reduced to 40%, and there is no recent load plan, Xinpu chemical vinyl chloride plant maintains half-load operation, so there is still some dichloroethane to be exported, and the domestic market supply continues to be loose
.

02Terminal demand continues to be sluggish, and the downstream market continues to be weak

Since 2021, under the influence of national real estate policy regulation and the new crown epidemic, the real estate investment bubble has been rapidly removed, housing market transactions have cooled down significantly, some housing enterprises have problems in the capital chain, the new construction index has continued to decline, and the demand for PVC has decreased significantly; On the other hand, stimulated by the lucrative profits in the early stage, the domestic PVC industry has greatly expanded its capacity, coupled with the 400,000 tons of ethylene plant of Cangzhou Julong Chemical and the 400,000 tons of ethylene PVC plant of Guangxi Huayi Qinzhou that are planned to be put into operation in the second half of this year, including the 400,000 tons of calcium carbide PVC plant completed in the early stage have been put into production in the near future, and the oversupply will become increasingly significant
.

Due to the aggravation of equipment losses, some calcium carbide enterprises have recently been forced to stop or reduce production, the supply has decreased, and the social inventory has decreased significantly, but it is still at a high level
compared with previous years.
As of November 13, the domestic PVC social inventory was 304,800 tons, a decrease of 2.
81% month-on-month and a year-on-year increase of 95.
89%, of which East China was 245,800 tons, a decrease of 2.
31% month-on-month and a year-on-year increase of 102.
14%; South China was 59,000 tons, down 4.
84% month-on-month and up 73.
53%
year-on-year.

Since the beginning of this year, the state has introduced a series of policies to stimulate economic and real estate development, but it will take time to achieve results, and the policy is mainly to ensure the delivery of housing, while the vacancy rate of new houses in China is very high, and the new construction index is difficult to effectively increase, so the increase in demand for PVC is limited
.
In terms of exports, in September, India once again launched an anti-dumping investigation on PVC products from China and the United States, while China's export market faced the impact of low-priced US supplies, and export volumes declined
.
In short, under the dual negative of internal worries and external troubles, the PVC market will still be under pressure in the
near future.

03The price of the external market fell continuously, which had an impact on the domestic market

In the past year, the international dichloroethane market has shown a unilateral downward trend, from a high of 980 US dollars / ton in late November 2021 to the current 235 US dollars / ton, a cumulative decline of 76%.

Dragged down by the external market, the price of dichloroethane in East China also showed a volatile downward trend during the same period, falling from a high of 7350 yuan / ton in mid-October last year to the current 2450 yuan / ton, a cumulative decline of 67%.

Affected by high inflation in Europe and the United States and successive sharp interest rate hikes, the downward pressure on the world economy has increased, the petrochemical industry as a whole has weakened, and the demand for raw materials has decreased
.
Affected by this, the price of dichloroethane as one of the chemical raw materials in the future market is still expected to decline, and the current sea freight has fallen to the pre-epidemic level, with the rapid decline of the US dollar index, the appreciation of the RMB, the source of import goods will increase, continue to impact the domestic market
.

On the whole, the domestic dichloroethane market supply increases, downstream demand continues to be sluggish, coupled with the impact of imported low-price supply, it is expected that the domestic dichloroethane market will continue to operate weakly in the near future, and the price still has some room for decline; Next spring, with the improvement of terminal real estate and downstream demand, it will start a rebound trend
.
(Source: China Chemical Information Weekly)