Ethylene Prices Show a Bullish Rally in China and European Markets, While Prices Remain Steady in the US

Despite the tepid downstream demand, Ethylene prices have witnessed an upward trend across Asia and European markets during the last week of July 2023. The rise in feedstock costs and volatile energy prices has been the major factor in the region's price increase. The speculation of recession across the Eurozone and rising interest rates by the central bank has eroded the purchasing power of consumers. At the same time, Ethylene prices have remained stagnant in the US market because of moderate demand and sufficient inventories.

According to ChemAnalyst, Ethylene prices have inched higher in the Chinese market. The cost pressure from feedstock Naphtha was also sufficient as its prices progressed in the uptrend in the given time frame. Although, demand for Ethylene from the downstream Polyethylene industries remained low to moderate in the domestic market. Market players reported the downstream procurement was mainly based on need-on- demand basis. Furthermore, the recent Super Typhoon Doksuri in Asia's biggest economy, China, has triggered power cuts in the region, which forced the manufacturers to shut down their plants or manufacturing units. The low inventories amid adverse weather conditions have further supported the Ethylene prices to follow the uptrend in the domestic market. On the other side, CNOOC and Shell Petrochemical (CSPC) in Huizhou, China, having a production capacity of 2,094 M Lbs/year, have shut down their Ethylene 1 unit amid unplanned shutdowns. Therefore, prices of Ethylene CFR Shanghai were assessed at USD 750/MT with a week-on-week increment of 2.7% during the week ending 28th July 2023.

In addition, after the bearish run over the past few weeks, Ethylene prices have shown a bullish trend in Europe's biggest economy, Germany. The feedstock Naphtha prices have increased, which resulted in the high production cost of Ethylene in the domestic market. Furthermore, the upstream crude oil prices have settled on the higher end, with supplies expected to tighten due to cuts from OPEC. The Brent Crude oil was settled at $83.79/barrel with a week-on-week increment of 3.6% on 28th July 2023. However, demand for Ethylene from the downstream Polyethylene industries was limited amidst sluggish consumer sentiments. The market transactions were relatively average, as purchasing enthusiasm of the terminal firm was not strong. On the other side, the availability of finished stocks of goods was sufficient amidst a decline in new orders. Therefore, prices of Ethylene FD Hamburg were settled at USD 620/MT with a week-on-week increment of 5.1% during the same time frame.

However, in the US market, Ethylene prices have shown no major fluctuations due to moderate demand and the equilibrium between the demand-supply gap. The manufacturers or traders kept the prices steady from the previous week to gain better buyer orders and complete the pending orders. The supply chain in the country improved, and the preceding factors impacted the overall market dynamics. Therefore, Ethylene FOB US Gulf prices were settled at USD 370/MT on 28th July 2023.

As per ChemAnalyst, Ethylene prices are anticipated to increase in the Chinese market due to further expectations of rising demand from the downstream Polyethylene industries. While in Europe and the US market, Ethylene prices will likely drop due to weak procurements from the downstream industries.