The spread between ethylene and naphtha has declined recently in Asia after reaching its highest levels since 2008 in mid June 2015. The shrinking spread was attributed to the downward momentum in the spot ethylene market amid spot naphtha prices that are declining at a relatively slower pace, according to ChemOrbis.
Spot naphtha prices in Asia are largely unchanged week over week, but are currently down by US$120/ton compared to the levels reported in mid-June. For ethylene, spot prices have plunged by over US$100/ton compared to last week, weighed down by volatile crude prices and high inventories. Compared with the levels reported in mid-June, spot ethylene prices in the region suggest an even larger drop of around US$470/ton. Due to the sharper fall in ethylene prices, the spread between Asian ethylene and naphtha prices has declined to around US$500/ton from this year’s peak of over US$800/ton.
According to ChemOrbis, oversupply for ethylene is unlikely to ease in the short term as no production issues are reported in the region for now and many crackers are reportedly running at full rates on the back of improved margins owing to lower naphtha costs.