Ethylene Carbonate Prices Surge in May 2024 Amid Upstream Pressures and Rising Freight Costs

Texas (USA): The US Ethylene Carbonate market demonstrated growth throughout May due to mounting pressure from upstream markets. Over the past few weeks, Ethylene Carbonate prices have gradually increased as Ethylene prices rise. Despite flat or declining demand, Ethylene Carbonate's raw material prices are rising, which typically would drive prices down.

One significant factor behind this is the ripple effect triggered by a decrease in ethylene production. With global demand for chemicals, especially ethylene, being low, the refining sector is scaling back production at the cracker level to restrict ethylene supplies. However, since most crackers maintain a fixed ratio between ethylene and other derivatives, a decrease in ethylene production results in a proportional reduction in all other key monomers. This trend is gradually pushing Ethylene Carbonate prices upwards.

Additionally, elevated freight rates have made the supply of crucial raw materials for Ethylene Carbonate more expensive. This factor has also supported the increase in Ethylene Carbonate prices. Freight rates have risen further across major sea trade routes. Unseasonal increases in demand for ocean freight from Asia, driven by a potential restocking cycle in Europe and North American importers pulling forward peak season demand due to concerns over labor issues or Red Sea disruptions later in the year, are adding extra strain to a container market already stretched thin by Red Sea diversions.

On the demand side, downstream buyers have exhibited a bearish sentiment in the Ethylene Carbonate market, with some still purchasing at low prices, though many have high inventory levels of Ethylene Carbonate and are in the process of destocking. The nearing end-of-month long-term contract negotiations have kept most downstream buyers in a cautious wait-and-see mode for Ethylene Carbonate trades.

According to the latest surveys by market participants, a significant decline in U.S. consumer interest in purchasing electric vehicles (EVs) has been observed, with only a minimal population interested in buying an EV. This trend has been spreading year-on-year in the US market. Early adopters have already bought EVs, while potential buyers are deterred by high costs, limited charging infrastructure, and range anxiety. However, interest in hybrid vehicles remains strong, as hybrids offer electrification benefits without major lifestyle disruptions. This suggests that while enthusiasm for EVs is waning, hybrids could play a crucial role in the transition towards greater vehicle electrification.

According to ChemAnalyst’s recent price assessment, a strengthened Ethylene Carbonate market is foreseen in the upcoming months, and prices are anticipated to hold their ground backed by enhanced market fundamentals and improved consumer sentiments in the region.