Towards the last week of August 2023, Ethylene prices settled on the higher end across Asia and German markets because of high upstream values. Although inquiries from the downstream industries have remained subdued in the European market due to firm inflationary pressure and high-interest rates, demand from the Chinese market has shown signs of improvement.

Despite the bleak downstream demand, spot Ethylene prices have unexpectedly risen in Europe's largest economy, Germany. The feedstock Naphtha prices continued to increase, lifted by strong crude oil values, which positively impacted the production cost of Ethylene in the domestic market, thus escalating the prices of Ethylene. As per the information provided by Gas Infrastructure Europe in mid-August, the storage levels for input energy reached a capacity level of 90.1%. This highlights the highest recorded level for this time of year and noticeably exceeds the European Union's objective of reaching the same point by November 1st. Although, inflationary pressure was curbing demand within the end-user sector by eroding their spending capacity. This has reduced consumer willingness to make purchases, causing a dampening effect on the Polyethylene sector's overall demand. On the other side, German manufacturing activity further contracted in August (i.e., below 50), reflecting a decline in new orders, but it did not lead to a decrease in the price realization of Ethylene. Therefore, prices of Ethylene FD Hamburg were settled at USD 670/MT with a weekly increment of 9.8% during the week ending August 25th.

Similarly, Ethylene prices have increased in the Chinese market, supported by high feedstock Naphtha prices. Demand for Ethylene from the downstream Polyethylene sectors has improved as consumption from packaging and plastic industries has slightly increased in the domestic market, which supported the current price trend of Ethylene in the domestic market. In the meantime, market participants have monitored the impact of an ongoing economic policy supported by the Chinese government on the polymer markets. Furthermore, the operating rates were low in the domestic market due to power restrictions or outages and unfavorable weather conditions, which restrained the material availability in the domestic market. On the other side, imports from South Korea, Japan, and other exporting markets have slowdown as typhoons appeared frequently in late July and Early August, which had an impact on the South China Sea and the East China Sea, causing some shipments to be delayed thus resulting in lower-than-expected import supply. Thus, as a result, prices of Ethylene CFR Shanghai were settled at USD 830/MT with a week-on-week increment of 2.5% during the same time frame. In addition, Sinopec Maoming in Maoming, China, has the plan to off-stream its Ethylene 1 unit at the start of Q3 of 2023.

As per ChemAnalyst estimation, in forthcoming weeks, Ethylene prices are anticipated to rise in the Asian market on account of high feedstock Naphtha prices. Furthermore, demand for Ethylene from downstream Polyethylene industries might increase amidst seasonal demand. However, Ethylene prices will likely drop due to bleak demand and the destocking of Eurozone inventories.