Ethylene prices rise in Asia amid production outages leading to supply restrains

24-Aug-16

Ethylene traded at US$1150 per ton in Asian markets in mid-August, over 30% above the year's low of US$860, reached in early February, as per asia.nikkei.com. Ethylene prices remain high in Asia, on robust demand amid an unusually large number of plants having suspended production, restraining supplies. In addition, three Japanese plants ceased production between 2014 and 2016. Accidents have forced other factories to shut down. A Royal Dutch Shell plant in Singapore experienced trouble in November, forcing it to suspend production until mid-July. Since then, a source said, the plant has only been able to deliver limited supplies to the spot market as it tries to feed its petrochemical complexes instead. Other factories, in Singapore as well as Japan, have also temporarily suspended production due to recent accidents. Industry insiders expect supplies to remain tight at least until October or November.

The ethylene market is tight, as indicated by its spread vs naphtha. The figure in July was between US$720 and US$730 per ton, marking the eighth straight month above US$600. The ethylene-naphtha spread is regarded as a key indicator of how well ethylene supplies are keeping up with demand, as per Nikkei staff writer.