Ethylene at years lowest level in Europe vs highest level in Asia - European ethylene set to hit Asia

Since July 2014, spot ethylene markets followed opposite directions in major global markets, as per ChemOrbis. Over the past year, spot ethylene prices dipped to their lowest level in Europe versus the highest level recorded in Asia. Players report that a significant amount of ethylene from Europe is set to arrive in Asia which is facing tight ethylene supplies. In Europe, spot ethylene held stable week over week on FD NWE basis, and indicated a €65/ton fall when compared to the start of September. Some cracker operators are expected to announce shutdowns in October. As a result, initial ethylene contracts for October settled on Thursday with a rollover from September given the unsupportive naphtha market in the region. A converter in Italy had already predicted this before the settlement saying, “In spite of weak upstream costs, scheduled shutdowns for October may put a cap on any possible softening.” BASF shut its 220,000 tpa cracker in Ludwigshafen, Germany for one month of maintenance until mid-October. ExxonMobil will shut its 425,000 tpa cracker in Gravenchon, France next month. Plus, HIP Petrohemija shut its 200,000 tpa cracker in Pancevo for two months. The cracker will be under maintenance between September-November. According to market sources, Versalis will permanently shut its Porto Marghera cracker with 490,000 tpa ethylene capacity. Simultaneously, spot ethylene figures in Asia edged up around US$5/ton over the week on CFR Northeast Asia basis, representing a US$25/ton increase so far this month. The market gained support from tight supplies owing to the maintenance season at regional crackers, even though the October outlook for downstream PE markets was on the softer side based on quiet trade ahead of National Day Holidays in China. Yeochun Naphtha Cracking Center shut its No.3 cracker with 470,000 tpa capacity on September 22 for a one month long planned turnaround. LG Chem plans to conduct maintenance between October 21-November 24 at its 1 million tpa cracker in Yeosu. A trader in Turkey commented that spot ethylene costs hit almost US$1700/ton in the US and US$1555/ton in Asia despite volatile energy markets. “There will be 84,500 tons of European ethylene arriving in Asian markets in the coming 4 weeks. Ethylene in Europe is the cheapest among the other regions so it will not fall more,” he claimed. “We already had doubts about a drop in ethylene costs since traders are exporting the ethylene surplus from the European market to Asia considering the advantageous USD/euro parity for exports,” a distributor in Italy commented, according to ChemOrbis. The gap between ethylene costs in Europe and Asia neared approximately US$400/ton recently, according to ChemOrbis Price Wizard.