Spot ethylene remains bearish in global markets

Spot ethylene prices have been tracking a bearish trend in major regions. The US and Asian markets have witnessed large losses recently, while spot values in the European market posted more moderate decreases, according to ChemOrbis. However, regarding the imminent settlements of European contract prices for November, expectations about seeing a hefty drop ranging from €50/ton to €100/ton are widely pronounced. In Asia, spot ethylene values have been moving down since late September. A cumulative decrease of uS$220/ton has been reported so far on average spot ethylene prices. Plunging energy markets, needless to say, played a major role in this decrease. The downturn gained speed particularly after the second week of October, when Chinese players returned from holiday and it became clear that demand in the country was not living up to expectations. In addition, increasing cracker rates pushed down prices amidst rising supplies and slow demand both in the monomer and polymer markets. Having hit an all time high in mid-September, spot ethylene prices in the US have been steadily losing ground as well. A total decrease of more than US$340/ton has been recorded in the spot ethylene market on average in the past 6 weeks with prices returning to early July levels. The constant losses in energy prices were the main trigger behind the sharp decreases in the US while some returning crackers also caused relief in supplies. European spot ethylene prices have been on a weak note too, although the recent decreases have not been as sharp as that of Asia and the US. This was because the downturn which was effective in the spot ethylene market between early July and late September was interrupted by the stable settlement of October ethylene contracts. The rolled over ethylene contract for October even pulled the spot ethylene market up in the following two weeks despite the hefty losses of the upstream naphtha market. An unexpected shutdown in the Netherlands also led to a spike in spot values earlier in October. Now, ethylene prices have been edging down somewhat in the spot market, as per ChemOrbis. Nevertheless, players are widely talking about seeing considerable drops in the impending contract settlements. “The outcome will be lower for sure but the size of the decrease has been in question,” argue players. A major PVC producer is expecting to see decreases ranging from €40/ton to €80/ton while another regional PVC producer thinks that November ethylene contracts will settle with decreases somewhere between €80/ton to €110/ton. Spot naphtha prices lost US$150/ton on average throughout October.