Following a long sustained downturn since the end of April, spot ethylene prices stabilized in H2-July in Asia. As per Chemorbis, the market started to move higher toward end of July, after which prices have followed a steadily firming trend. Spot ethylene prices on CFR Northeast Asia basis gained US$75/ton as compared to prices at the beginning of August, while price hikes in Southeast Asia were relatively more modest at US$40/ton on CFR basis within the same period.
News of unscheduled shutdowns at major production sites has been the main factor in firming ethylene prices. The news that Formosa had to shut its cracker and refinery due to a fire at its complex in late July initiated the rising trend. Ethylene markets managed to retain strength last week despite a more than 6 dollar fall in crude oil prices and a US$40/ton drop in naphtha prices. Traders also report that demand from downstream PE and PVC markets are regular these days. Rising ethylene feedstock costs have also helped downstream PE producers up-adjust their September offers recently. Regular sellers in Asia and Middle East have started to reveal their new PE offers to China with increases.
In the European market, spot ethylene market has also been firm throughout August. After the monthly ethylene contract was settled with an €18/ton decrease, spot values have edged up by €20/ton in the early days of the month, followed by another €10/ton increase. Diminishing prompt availability in the region has prompted this month’s firming trend. Sellers are not aggressively making offers due to their low stocks, and producers say that they can only meet contractual volumes and have no spare cargoes to allocate for the spot market. Buying interest has also picked up since buyers are trying to secure cargoes in preparation for the maintenance season. Some buyers have even concluded deals for their September needs in anticipation of further increases in the days to come. The lack of prompt availability has even attracted import cargoes from the Middle East to the region.
Contrary to this steadily firming trend in two major regions, spot ethylene values have been fluctuating in the US since the beginning of August. In the first week of the month, some August deals were concluded with increases of up to US$130/ton when compared to earlier deals. However, the market turned downwards in the following two weeks, cancelling the previous gains. At the end of last week, the notional market level for spot ethylene was reported US$88/ton below the beginning of the month. The imminent restart of Dow’s olefins unit at Freeport, Texas with an ethylene production capacity of 450,000 tpa was mainly blamed for the downturn as it was expected to result in loosening supplies in the region. However, the recent done deals are reported with slight increases of US$20/ton again as of this week, which players attribute to higher ethane prices and strong derivative demand.