Ethylene prices have remained subdued across the global market during the third week of June 2023 due to sluggish growth of the downstream market and oversupply in the regional market. Volatile Crude Oil prices and cheap imports from the exporting nation have further supported the Ethylene prices to follow the downtrend in the regional market. Furthermore, the macroeconomic challenges such as speculation of recession coupled with rising interest rates by the European central bank (ECB) and Federal Reserve Bank to combat persistent high inflationary pressures have crushed the market growth of Ethylene.

Despite the high feedstock Naphtha prices, Ethylene prices have dropped in the Chinese market. The price decline was attributed to the sluggish growth of downstream demand amid high-interest rates and inactive domestic recovery. Furthermore, on the supply side, the inventory level has been increased due to the restart of the Ethylene cracker. Furthermore, Purchasing Manager's Index (PMI) dropped from 49.2 to 48.8 in May, reflecting a slump in new orders. In addition, the major manufacturer of Ethylene PetroChina, Liaoyang Petrochemical in Liaoning, China having a production capacity of 200,000 MT/Year, has onstream their Ethylene cracker in early June 2023. Consequently, prices of Ethylene CFR Shanghai were settled at USD 770/MT with a week-on-week decrement of 6.1% in the week ending 16th June.

Similarly, Ethylene prices have dropped by USD 20/MT in the German market as demand from the downstream Polyethylene and Glycol value chain industry showed no sign of improvement. The domestic production cost has remained soft amid stable feedstock Naphtha prices. In the meantime, the supplies from the USA and Asian countries have remained steady, which led to sufficient stockpiles in the European ports, which supported the current price trend of Ethylene. As per the market sources, German entered the recession in May after two-quarters of contraction as inflation eroded the purchasing power of end-users in the market. In addition, the manufacturing PMI decreased to 43.2 in May, indicating a contraction in industrial and manufacturing activity.

Moreover, the new orders declined fastest in the last six months in May. On the other side, the volatility of the global supply chain index decreased to -0.28 in May, which indicated the normal operation of the supply chain. Thus, prices of Ethylene FD Hamburg were assessed at USD 730/MT on 16th June.

On the other side, subdued consumption from the end-user packaging, plastic, and the Mono-Ethylene glycol sector, has culminated in the bearish sentiments of Ethylene in the USA market. The cost support from feedstock Ethane prices has remained soft while the natural gas prices have also inched lower despite the spiraling inflation in the domestic market. On the other side, the major manufacturer of Ethylene, Chevron Phillips in Cedar Bayou, Texas, has undertaken an unplanned shutdown in early- June 2023. Thus, Ethylene FOB US Gulf prices were assessed at USD 410/MT with a week-on-week decrement of USD 40/MT during the same time frame.

According to ChemAnalyst, Global Ethylene prices will remain on the negative side on account of tepid consumption from the downstream value chain sector. Feedstock prices, as well as energy prices, will remain low, which may further impact the prices of Ethylene in the upcoming weeks.