As oil tanks and demand weakens, ethylene in Asia breaches the US$1000/mt mark

01-Jun-12

Ethylene prices in Asia breached the US$1000/mt barrier in Asia for the first time since November 19, 2010 -- as falling crude amid weak demand and sentiments pressured prices lower, as per Platts. CFR Northeast Asia ethylene was pegged at US$995/mt as crude on the Nymex fell by US$2.94/barrel. Buyers bids have fallen to US$990 levels while sellers continue to resist dropping offers below the four-digit figure, hanging on to selling indications of "mid-$1,000s." Ethylene has been on a sharp downtrend since April 16, shedding UA$408/mt amid weak demand, especially from downstream end-users. Polyethylene has been under strong downward pressure due to weak demand for finished products amid economic uncertainty in Europe. LLDPE has fallen by US$165/mt over April 16-May 30, to be assessed at US$1210/mt CFR Far East Asia. Ethylene production margins have mostly been in the negative since May 23, 2011. Based on a theoretical cracking cost of US$350/mt and naphtha being assessed at US$849.63/mt CFR Japan, the breakeven cost of producing ethylene is around US$1200/mt.