Spot ethylene under dual pressure in Asia

Ethylene prices in Asia are under dual pressure from the upstream and downstream chain, as spot values moved lower since the first day of March, as per ChemOrbis. Losses of the energy complex along with a stable to soft sentiment in the downstream PE market are weighing down on the ethylene market, causing a total decrease of US$60/ton in a week’s time. Indeed, the loss of the ethylene market is larger at US$80/ton when compared to February 27, when a peak was reached after steady gains for two months. In the upstream chain, crude oil futures on Nymex traded at around US$90/bbl for the past few days before gaining slight ground back up to US$91/bbl on Thursday’s daily trading. When looking at the downstream market, PE players reported disappointing demand and comfortable supplies this week in China. Local PE prices have sunk for two weeks in a row with domestic producers conceding to further decreases in order to speed up their sales. A converter in the packaging sector reported, "We are only purchasing small amounts of material from the local market now as we do not find import prices to be competitive." The import PE market in China is facing downward pressure this week as well in the midst of disappointing demand and comfortable supplies. Overseas producers remain firm with their offer levels, although players argue that they are struggling to maintain their firm stance amidst weakening local prices. The MEG market, another downstream market for ethylene, is also following a softer trend in Asia, according to market players. Needless to say, weak market conditions in Asian PE and MEG markets are resulting in poor demand for spot ethylene. After losing more than US$60/ton in more than a week, spot ethylene is currently pegged at US$1340/ton CFR Northeast Asia. The weekly loss of the spot ethylene market is despite the fact that some crackers are shutting or preparing to be shut for maintenance in the March- April period according to ChemOrbis. South Korea’s SK Innovation shut its No 1 naphtha-fed steam cracker at Ulsan this week for a planned maintenance that will last until April. Meanwhile, there are scheduled turnarounds scheduled for at least three crackers in April.
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