Ethylene prices declined during the first half of March, primarily in response to reduced feedstock naphtha costs in the USA. Less expensive feedstock, in conjunction with lower demand from the downstream market supported downward pressure on prices. Ethylene prices were similar in Germany as naphtha costs declined compared to early March. Yet in Germany, the downstream sector experienced greater demand which softened the price declines versus the USA. As feedstock prices vary and demand dynamics differ in regions, the global ethylene market continues to respond accordingly.

In the first two weeks of March, ethylene prices in the USA dropped mainly due to the plunge in price of feedstock naphtha, which was driven lower by weaker crude oil prices and ample supply. The lower production costs for ethylene manufacturers intensified price pressure on ethylene and were part of the overall decrease.

Underlying this price weakness was the softening demand from the downstream sector including industries like plastics, packaging, and chemicals that were facing declining consumption, which was weakened by economic uncertainties and the slowdown in manufacturing activity. Softer demand intended that purchasing activity was limited, and price stabilization was not achieved, reinforcing downward pressure on prices in the U.S. market.

In Germany, ethylene prices were under pressure as feedstock naphtha prices also fell. The reduction in naphtha prices resulted from a decrease in global crude oil prices and an abundance of naphtha in Europe. Naphtha feedstock cost less, which made the cost of producing ethylene cheaper in Germany, and although production levels remained stable, this put downward pressure on market prices.

Compared to the USA, the downstream sector in Germany saw higher demand during this period, with improved activity reported in the plastics, automotive, and packaging sectors, which improved ethylene consumption; however, even with stronger demand, the under-cutting effect of lower feedstock costs on prices outweighed the volume of consumption, and the total market price for ethylene fell over the entire period.

As per ChemAnalyst, USA ethylene prices look to soften in upcoming month as feedstock naphtha prices remains low and downstream demand continues to weaken. With weak consumption from major end-user industries are likely to create ongoing price pressure. Markets in Europe could see prices rise. Although feedstock naphtha prices are down, increased demand from plastics and automotive sectors could increase prices. If demand increases continue, there could be a recovery in European ethylene prices away from the trends in the US market.