Higher energy costs push spot ethylene prices higher across the globe

15-Nov-11
Spot ethylene prices in Asia, Europe and the US gained ground over the past week as rising energy costs and poor margins on ethylene production pushed sellers to raise their prices, as per Chemorbis. Ethylene demand was still described as sluggish in most regions, with some players commenting that supply and demand might begin to move back into balance as weak margins have pushed cracker operators to reduce rates. In Asia, the spot ethylene market, last week, witnessed its first real week-over-week increases since late August. Sources pointed to firmer crude oil and naphtha prices as the major factors behind the up-tick in spot ethylene pricing. Most Asian ethylene producers are still said to be operating under margin pressure as the downstream demand outlook is discouraging and most buyers therefore remain hesitant to buy. Reduced operating rates at several cracker operators within the region could help to bring supply and demand back into balance, although some sources commented that an anticipated influx of Middle Eastern material will keep the market well supplied over the next few months. In Europe, spot ethylene prices recorded their first weekly increases since early August as lower operating rates at cracker operators within the region and the successful conclusion of some ex-Europe export deals helped bring supply and demand dynamics back into balance. Cracker operators are generally operating at reduced capacity owing to unfavorable production margins, although several sellers reported that they would be prepared to lift their operating rates in response to an improvement in demand. Buyers commented that incremental ethylene demand is still sluggish given the lackluster demand outlook for many downstream applications. In the US, prices firmed up over the past week in line with stronger ethane prices. A few spot deals for November ethylene were recorded earlier in the week, although most of the gains in spot prices were witnessed towards the end of the week, tracking movements in the upstream ethane market. Sources commented that ethane prices were pushed higher over the past week by a combination of rising crude oil prices and healthy ethane demand within the country.
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