Germany: Ethylene prices have continued to be weakened across Europe and Asian markets in the second week of May 2023 on account of limited upstream pressure along with moderate to weak demand dynamics. The economic uncertainty, such as recession across the major economy (Germany), along with rising interest rates by the European Central Bank (ECB), have worsened the market sentiments of Ethylene.

Ethylene prices have remained subdued in the Chinese market amidst inadequate cost pressure and limited downstream demand. On the feedstock side, Naphtha prices have dropped, followed by the continuous decline in the upstream energy (crude oil) prices have supported the Ethylene prices to follow the downtrend in the domestic market. On the other side, consumption of Ethylene from the downstream Polyethylene industry has remained bearish as the consumption from the plastic sector has diminished, leading to the average transaction of Ethylene in the domestic market. Furthermore, according to the National Bureau of Statisticians, the Purchasing Manager's Index dropped from 51.9 to 49.2 in April, indicating a subdued global demand.

In addition, the major producer of Ethylene, Zhejiang Petroleum and Chemical Co (ZPC) in China, which has a capacity of 1.4 million tonnes per year, has shut down its No.1 Ethylene cracker for 40 days due to scheduled maintenance. Moreover, some corresponding downstream petrochemical derivative units, such as the Polyethylene and Monoethylene Glycol units, were also shut in line with the cracker. Although, it had not impacted the prices of Ethylene at a very broader level, as there were sufficient inventory and inadequate demand. Thus, prices of Ethylene CFR Shanghai were settled at USD 870/MT with a week-on-week decrement of USD 30/MT during the week ending 12th May.

Similarly, Ethylene prices have continued to decline in the European market due to a slowdown in the downstream demand and sufficient supply. The oversupplies of feedstock Naphtha have limited the positive development of Ethylene in the regional market. On the other side, benchmark Dutch TTF gas prices reduced to around 28 Euros, the last level seen in June 2021, with tight supply concerns easing as Europe heads into summer and less dependent on Russian energy. Meanwhile, the ample material available on European shores via the steady inflows of cheap Asian imports has resulted in a supply-dominant market. On the demand front, demand from the Polyethylene industry has decreased, and the market transaction was relatively flat in the region. Hence, in Germany, prices of Ethylene FD Hamburg were settled at USD 825/MT with a weekly declination of USD 50/MT on 12th May.

As per ChemAnalsyt's anticipation, Ethylene prices will continue to follow a similar trend in the coming weeks as demand from downstream Polyethylene and other value chain industry is not likely to rebound amid sluggish consumer confidence. Furthermore, cost pressure from both upstream and feedstock is expected to ease, which may further weaken the prices of Ethylene in Asia and Europe.