For the Quarter Ending September 2024
North America
The third quarter of 2024 has been a period of significant price escalation for Ethylene in North America, with the USA experiencing the most notable price fluctuations. Various factors have contributed to the surge in market prices thus creating optimistic market sentiments.
Tight supply conditions, driven by low production rates and plant maintenance shutdowns, have limited Ethylene availability, leading to a bullish market sentiment. Additionally, strong demand from the downstream Polyethylene sector, particularly in the packaging industry, has further bolstered prices. The quarter-on-quarter price increase of 44% underscores the growing market dynamics.
Comparing the first and second half of the quarter, prices surged by 20%, indicating a rapid acceleration in the pricing environment. Overall, the price trend for Ethylene in the USA has been overwhelmingly positive, with an impressive 51% increase from the same quarter last year. The quarter-ending price of USD 735/MT for Ethylene Spot FOB US Gulf in the USA reflects the robust and continuously rising pricing landscape in the region.
APAC
Ethylene pricing in the APAC region during Q3 2024 has seen a consistent decrease, influenced by various factors. The market has been impacted by weak demand from downstream industries, particularly in the Polyethylene sector, leading to oversupply and subsequent price drops. Additionally, reduced operating rates in manufacturing firms and supply constraints due to plant shutdowns have further contributed to the downward pressure on prices. Japan, in particular, has experienced significant price changes, with limited availability of Ethylene and technical issues at major production facilities leading to tighter supplies and higher prices. Overall, the quarter has seen a decline of 6% compared to the same quarter last year, reflecting the ongoing bearish trend. Moreover, the quarter-on-quarter change of -2% indicates a consistent downward trajectory in pricing. The second half of the quarter showed a further decrease of 1%, culminating in the latest quarter-ending price of USD 833/MT of Ethylene FOB Tokyo in Japan. This continuous decrease highlights the negative pricing environment prevailing in the market.
Europe
Throughout Q3 2024, Ethylene prices in Europe experienced a significant increase, with Germany being the most affected market. This surge in prices can be attributed to a combination of factors such as tight supply situations, increased feedstock Naphtha prices, and global oil price fluctuations. Demand from downstream industries, particularly Polyethylene and Ethylene oxide, remained subdued, contributing to the upward pressure on prices. The quarter saw a notable 27% increase compared to the same period last year, with a 10% increase from the previous quarter in 2024. Price changes within the quarter also showed a 17% difference between the first and second half. Germany, in particular, witnessed substantial price fluctuations, with Ethylene FD Hamburg reaching USD 1011/MT by the end of the quarter. Creating optimistic market sentiments throughout Q3 2024. This continuous upward trend in prices indicates a positive pricing environment, driven by supply constraints, rising production costs, and limited imports, ultimately leading to a bullish market sentiment in the region.
MEA
In Q3 2024, the MEA region witnessed a decline pricing environment for Ethylene. This quarter was characterized by consistent pricing trends, influenced by various factors. The market prices were primarily impacted by subdued demand from downstream industries, particularly in the plastics and packaging sector, leading to a surplus in supply. Additionally, fluctuations in feedstock Naphtha prices and global economic conditions contributed to the stability in Ethylene prices. Focusing on Saudi Arabia, which experienced the most significant price changes, the market reflected an overall negative trend compared to the same quarter last year, with a decrease of 9%. Moreover, there was a 0.48% decrease from the previous quarter in 2024. The comparison between the first and second half of the quarter showed no significant price changes, maintaining a stable trajectory. The quarter-ending price for Ethylene FOB Al Jubail in Saudi Arabia stood at USD 825/MT, indicating a consistent and stable pricing environment in the region.
For the Quarter Ending June 2024
North- America
Ethylene prices have significantly increased in the US market throughout the second quarter of 2024 on the back of improved demand dynamics and restricted inventories. The feedstock Ethane prices increased throughout the quarter which escalated the production cost of Ethylene within the domestic market, leading the bullish market sentiments about Ethylene among the end-users.
However, energy prices have showcased volatility during the Q2 of 2024. In addition, the domestic demand for Ethylene from the downstream Polyethylene industry has been strong from both processors and resellers amid the summer peak season which lifted the prices of Ethylene in the domestic market. Meanwhile, export demand from Latin America mainly Brazil has also been observed on the higher end as Latin American buyers, facing high freight costs and delays from Asia amid port congestion, turned to the US for quicker and more competitive supplies.
Furthermore, the operating rates remained low and as a result, the material availability was inadequate to meet the downstream demand. On the other hand, the indefinite closure of the Port of Baltimore after a bridge collapse has impacted the supply of various commodities including Ethylene. Thus, prices of Ethylene FOB US Gulf were settled at USD 510/MT with a month-on-month increment of 14.1% during June 2024.
Asia- Pacific
Ethylene prices have witnessed a downward trend across the Japanese market during the second quarter of 2024 owing to weak demand from derivative sectors coupled with sufficient supply in the domestic market. The feedstock Naphtha prices have persistently declined amid adequate inventories and limited demand which resulted in the low production cost of Ethylene in the domestic market, contributing to a downward shift in the price realization of Ethylene in the domestic market. On the demand front, the inquiries from the downstream Polyethylene industry were average as consumption from the end-user plastic and packaging sector has declined which weighed down the prices of Ethylene in the domestic market. In addition, downstream production margins remained weak, with buyers citing poor profitability on key derivatives such as Polyethylene. In the meantime, demand from the overseas market has also tepid amid weak buying trends among the end-users during the week. However, as per the market sources, Japan’s exports surged 13.5% in May, faster than expected growth helped by a weak yen.
Additionally, the operating rates have been steady to balance out underperforming demand. The material availability was observed on the higher end, keeping the prices downtrend in the domestic market. Therefore, prices of Ethylene FOB Tokyo were settled at USD 848/MT during June 2024. Mitsui Chemicals, Ichihara has shut down the Ethylene plant amid maintenance turnarounds, but it had a minimal impact on the supply of Ethylene.
Europe
The second quarter of 2024 has been notably challenging for the Ethylene market in Germany, characterized by a downward trend in Ethylene prices. Despite the challenging landscape, signs of cautious optimism are emerging amid the recent rally in freight rates and container shortage. The feedstock Naphtha prices declined throughout the quarter resulting in the low production cost of Ethylene which weighed down the prices of Ethylene in the domestic market. However, upstream crude oil prices have showcased a fluctuation during the Q2 of 2024.
Furthermore, underlying weakness in the domestic Ethylene market continued to call for limited demand from the downstream Polyethylene industry. Converters still preferred to buy on a need basis, while buying interest further declined amid macroeconomic headwinds in the domestic market. Overall, subdued downstream demand contributed to a downward shift in the price realization of Ethylene within the domestic market.
On the other hand, the supply of Ethylene was sufficient despite the low domestic operating rates, keeping the prices downward. At the same time, persistent delays in shipments from Asia continued to affect the market, causing port congestion and delayed arrivals at the warehouse. Also, freight charges have remained on the higher end amid the Red Sea crisis. However, it had a minimal impact on the prices of Ethylene as buyers were reluctant to purchase the material as demand remained flat at low levels while inventories remained healthy. Additionally, market conditions were expected to remain fairly stable up to August, with more uncertainty after summer. Thus, prices of Ethylene FD Hamburg were settled at USD 795/MT with a monthly decrement of 3.0% during June.
Middle- East
Ethylene prices have witnessed a downward trend across the Saudi Arabian market during the second quarter of 2024 in the wake of thin derivative demand and excessive supply. The cost supported by feedstock Naphtha was limited to Ethylene as its prices settled on the lower end, causing the prices to follow a downtrend in the domestic market. On the other hand, the domestic Ethylene market experienced a subdued trading momentum, as reflected in the weakening purchase appetite for materials. The adverse impact on market sentiment arises from a combination of bearish factors comprising weak demand from the downstream Polyethylene industry amid holiday lulls. Additionally, consumers were seen preferring to make need-based purchases owing to a fall in orders from end-user industries, which weighed down the prices of Ethylene in the domestic market. Meanwhile, demand from the overseas markets has also flat with expectations that it may not recover soon amid external challenges. Moreover, the supply of Ethylene was sufficient amid a decline in new orders to meet the overall downstream demand which further deteriorated the prices of Ethylene in the domestic market. Thus, during June prices of Ethylene FOB Al Jubail were settled at USD 863/MT with a decrement of 2.7% on a monthly basis.
For the Quarter Ending March 2024
North America
Ethylene prices have witnessed a mixed trend in the US market during the first quarter of 2024. During the initial Q1 of 2024, Ethylene prices have inched lower in the domestic market. The feedstock Ethane prices have declined which resulted in the low production cost of Ethylene in the domestic market. These lead to the bearish market sentiments of Ethylene among the manufacturers.
On the input energy front, Natural gas prices have been low this winter, helped by healthy production and unusually warm weather which further eased the overall production cost of Ethylene in the domestic market. In addition, demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry was sluggish from both the domestic and international market which weighed down the prices of Ethylene in the domestic market.
However, towards the end of Q1 2024, Ethylene prices have gained an upward momentum in the domestic market. The reduced operating rates in the previous month amidst the holiday season have led to limited availability of finished stocks. As a result, manufacturers have raised their offers. Additionally, as per the market sources, the downstream manufacturing firms have been returning from the winter holiday seasons and were focused on replenishment the raw materials to supplement the downstream production, reinforcing the market fundamentals of Ethylene among the manufacturers. Moreover, on the demand front inquiries from the downstream Polyethylene industry have improved as consumption from the plastic and packaging sector has steadily increased which further pushed up the prices of Ethylene in the domestic market. As a result, prices of Ethylene FOB US Gulf were settled at USD 428/MT during March 2024.
Asia- Pacific
Throughout the first quarter of 2024, Ethylene prices have persistently increased in the Japanese market on the back of high upstream costs and tight supply within the domestic market. The cost support from feedstock Naphtha was sufficient for Ethylene as its prices settled on the higher end in the domestic market, leading to the bullish market sentiments of Ethylene among the manufacturers. On the input energy front, crude oil prices have remained above $80 per barrel for much of February, indicating a tightening in the physical market due to ongoing OPEC+ production cuts and the prolonged rerouting of cargoes away from the Red Sea and the Suez Canal. Furthermore, during the holiday, the production situation of downstream factories varies, with some mainly digesting inventory, leading to an increase in the demand for Ethylene. In addition, amidst the disruptions across the Red Sea, the freight rates have also remained on the higher end. On the other hand, manufacturing firms have been operating at low rates in response to an overall decline in downstream demand, leading the insufficient material availability in the domestic market. As a result, prices of Ethylene FOB Tokyo were settled at USD 935/MT during March 2024.
Europe
Ethylene prices have been on a firm footing across the German market during the first quarter of 2024 on the back of high upstream costs and logistics snarls that curtailed import material flow. The cost support from feedstock Naphtha prices was sufficient on Ethylene as its prices settled on the higher end in the domestic market. On the input energy front, crude oil prices have been strengthening over the past few weeks following a string of drone attacks by Ukraine on Russian refineries, sparking concern about fuel supply security. The rise in crude oil prices has further raised the overall production cost of Ethylene in the domestic market. Furthermore, reduced domestic production in the previous month in response to a decline in downstream demand, leading to the limited availability of finished stock of Ethylene in the domestic market. Meanwhile, import prices have reached their highest levels as longer transit times and high shipping costs stemming from the Red Sea attack caused a series of notable hikes. Looking at the demand side, the inquiries from the downstream Polyethylene industry however remained average within the domestic market as consumption from the packaging and plastic industry has slowed down amid macroeconomic headwinds. As a ripple effect, prices of Ethylene FD Hamburg were settled at USD 938/MT during March 2024.
Middle- East
Ethylene prices have persistently increased in the Saudi Arabian market throughout the first quarter of 2024. The cost side was one of the major drivers of the uptrend as feedstock Naphtha prices have continued to rise, leading to the bullish market sentiments of Ethylene among the manufacturers. On the upstream front, global crude oil prices have remained above USD 80 per barrel, indicating a tightening in the physical market amid ongoing OPEC+ production cuts and the prolonged rerouting of cargoes away from the Red Sea and Suez Canal. The strong crude oil prices have further pressured the feedstock Naphtha prices to remain firm within the domestic market. Despite this, OPEC+ is not planning any policy changes in the upcoming joint Ministerial Monitoring Committee meeting. Meanwhile, geopolitical tensions in the Middle East and Russia are raising concerns about tighter supply. Market players are closely monitoring these developments, alongside global economic struggles against recession and the Federal Reserve's potential rate cuts this summer. Furthermore, demand for Ethylene from the downstream Polyethylene industry was stable as consumption from the plastic and packaging sector has been steady in the domestic market.
For the Quarter Ending December 2023
North- America-
Ethylene prices have experienced a mixed sentiment across the US market during the fourth quarter of 2023. During the initial of Q4 2023, Ethylene prices increased significantly due to limited material availability in the domestic market. The cost support from feedstock Ethane was sufficient as its prices settled on the higher side in the domestic market. In addition, demand for Ethylene from the downstream Ethylene oxide and Polyethylene industry has improved, which led to the bullish market sentiments of Ethylene among manufacturers.
However, during November and December, Ethylene prices have inched lower in the domestic market. The feedstock Ethane prices have decreased amid weak demand from other industries which in turn led to the low production cost of Ethylene. In addition, demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained subdued amid the off-seasonal dullness along with macro-economic headwinds including high inflationary pressure and rising interest rates, leading the bearish market sentiments of Ethylene among the manufacturers. In addition, spot market transactions were also average as the enthusiasm of terminal firms to enter the market was not strong.
In the meantime, demand from international markets including Asia and European markets has subdued in recent weeks as macroeconomic challenges continue to keep consumer spending at bay. US Ethylene producers faced difficulties in raising export prices as buyers found it difficult to stomach. On the supply side, the material availability was plentiful to cater to overall downstream demand which further weighed down the prices of Ethylene. Therefore, prices of Ethylene FOB US Gulf were settled at USD 421/MT during December 2023.
Asia- Pacific-
Ethylene prices displayed varied sentiments in the Asian market throughout the final quarter of 2023. In the early stages of Q4, Ethylene prices saw an uptick in the Japanese market, driven by cost pressures from elevated feedstock Naphtha prices in the domestic market. This resulted in a bullish outlook among Ethylene manufacturers. Additionally, demand from the domestic Polyethylene industry remained moderate during this period.
However, towards the end of Q4, Ethylene prices experienced a decline in the Japanese domestic market. The demand from both the Polyethylene and Ethylene oxide industries remained sluggish due to macro-economic challenges and low seasonality. Spot market transactions were also average. The economic downturn in China, the world's second-largest economy, had a ripple effect on countries dependent on trade with Beijing for growth, including the Japanese Ethylene industry. This impact was not geopolitical but rather a consequence of the economic slowdown. Weak global demand subdued domestic activity, and concerns in China's property sector contributed to the downturn in the Japanese Ethylene industry. According to the Ministry of Finance, Japanese exports dropped 0.2% YoY to JPY 8,819.59 billion, marking the first decline in three months, mainly influenced by weak demand from China.
Furthermore, the decrease in feedstock Naphtha prices led to a reduction in the production cost of Ethylene in the Japanese domestic market. Additionally, Japan's manufacturing activity declined in November, reflecting the fragility of the economy amid weak demand and inflation. High material availability on the supply side added pressure on manufacturers to clear inventories at lower prices. Consequently, Ethylene prices FOB Tokyo was settled at USD 853/MT in December 2023.
Europe-
Ethylene prices have showcased mixed bags in the European market during the fourth quarter of 2023. During October 2023, Ethylene prices significantly increased in the German market due to inadequate material availability in the domestic market. The demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained active which supported the prices to follow an upward trend in the domestic market. Meanwhile, imports from the Asian market have turned costly as freight charges have increased which in turn led to high imported prices of Ethylene in the domestic market.
However, during November and December 2023, Ethylene prices have gained a downward trend in the domestic market. The demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained lukewarm due to macroeconomic headwinds including persistent inflationary pressure and high interest rates coupled with low seasonality which weighed down the prices of Ethylene across the domestic market. Furthermore, BASF mapped out further cost cuts and scaled back investment spending; earnings and sales were at the lower end of its target ranges due to an uncertain global outlook.
In addition, cost pressure from feedstock Naphtha was limited on the Ethylene as its prices settled on the lower end in the given time frame. Also, the German manufacturing purchasing manager index remained in the contraction zone (i.e., below 50) indicating a deterioration in industrial and production activity. Furthermore, amid the destocking season, manufacturers have cleared out their inventories at low prices. As a result, prices of Ethylene FD Hamburg were settled at USD 730/MT during December 2023.
Middle East-
Throughout the final quarter of 2023, the Saudi Arabian Ethylene market experienced fluctuations in prices. In the early part of Q4, domestic Ethylene prices saw an upward trajectory, primarily influenced by increased Naphtha prices, a key feedstock, and robust crude oil prices, elevating the production cost of Ethylene domestically. The heightened demand from both domestic and international markets, particularly from the Polyethylene and Ethylene oxide industries, prompted manufacturers to raise their pricing.
However, towards the end of Q4, there was an unexpected decline in Ethylene prices within the domestic market. This was attributed to subdued demand in the midst of off-season sluggishness and a tepid global economy. Ethylene demand from both domestic and international markets was lackluster, leading to weak inquiries from the downstream Polyethylene industry. Slow consumption in the end-user sector contributed to bearish market sentiments among Ethylene manufacturers.
Additionally, a decrease in feedstock Naphtha prices, coupled with low crude oil prices, resulted in a reduction in the production cost of Ethylene in the domestic market. Despite turmoil in the Red Sea, upstream Crude oil prices dropped due to weak demand and ample storage, further easing the overall manufacturing cost of Ethylene domestically.
Looking ahead, the prevailing bearish sentiment is expected to persist into the new year due to tepid demand. Buyers are exercising caution, awaiting more clarity amid the ongoing war, and growing economic challenges. Consequently, Ethylene prices FOB Al Jubail was settled at USD 867/MT in December 2023.
