Spot ethylene prices rise in Asia, Europe, weaken in US

Over the past week, spot ethylene prices gained ground in Asia on tighter supplies and in Europe on a weaker euro resulting from the ongoing sovereign debt crisis, as per the pricing service of ChemOrbis. In USA, spot ethylene prices moved lower last week in accordance with the late week slippage in crude oil prices. Spot ethylene prices moved higher over the past week, pushing spot prices on a CFR Northeast Asia basis to their highest levels since late August. Tighter supply within the region was cited as the main factor pushing up prices as a number of crackers within Asia have either shut down or reduced their operating rates over the past week. Players commented that production problems in Iran have also contributed to reduced availability in Asia. “Ex-Iran deliveries have been delayed as some crackers in the Pars Special Economic Zone are experiencing technical problems,” commented a trader. Sellers are reported to be seeking additional price increases, although buyers are offering resistance to any further price hikes. “Derivative demand is not generally strong enough to support higher ethylene prices. Spot LLDPE film prices are hardly carrying any premium above ethylene for now and other key derivatives are not doing much better as per ChemOrbis. MEG is the only ethylene derivative providing margins healthy enough to support further increases in ethylene,” reported an ethylene buyer. Spot ethylene prices also gained ground in Europe over the past week. Players attributed the rise in spot prices to the depreciation of the euro against the dollar prompted by renewed fears of sovereign debt downgrades as no solution has yet emerged to resolve the region’s debt crisis. Cracker operators reported that they are seeking further increases in the days ahead as naphtha costs have risen and they need to achieve higher prices in order to restore positive operating margins. “We are also targeting an increase on the January ethylene contract as higher naphtha prices and a weaker euro have pushed our margins into negative territory,” commented a producer source. Buyers countered with rollover proposals for January, saying that derivative demand has not really improved recently and is not strong enough to support higher prices for the coming month. In the US, spot ethylene prices moved lower over the past week as the late week decline in crude oil prices combined with sluggish demand to push prices lower. “Spot ethane feedstock costs came down following the late week losses in crude, which caused offers at the higher end of the range to be withdrawn from the market,” commented a trader.