Ethylene prices split in the USA and Germany in early June on a regional variation in feedstock costs, availability, and downstream demand. U.S. prices crept up with naphtha and crude oil prices increasing, having firm domestic demand and restricted export expansion. German prices fell initially due to poor polyethylene demand and excess inventories but recovered marginally as supply steadied. In the future, U.S. prices are likely to increase with firmer seasonal demand and export demand, whereas German prices are set to decrease further from weak downstream demand and increasing low-cost imports.
In the first two weeks of June, ethylene markets in the USA and Germany followed diverging paths driven by regional factors in feedstock costs, available supply, and downstream demand.
In the USA ethylene prices increased slightly during the first week of June due to slight increase in feedstock naphtha prices and higher global crude oil prices. Export sentiment shifted slightly higher, as tighter supply condition in Asian markets sparked limited arbitrage opportunities, with U.S. producers considering more international outlets. However, foreign interest remained muted, especially from Southeast Asian importers who continued to prefer regional supply sources offering cost advantages and possibly fast delivery times. The higher production costs resulted in 2.4% increase of Ethylene in the US in the first week of June.
On the supply side U.S. producers were mildly constrained on capacity, but production continued to recover from previous maintenance activities. Elevated feedstock prices put pressure on margins, yet overall ethylene supply was plentiful enough to meet domestic and global needs. Domestic demand for ethylene was steady from downstream derivative plastics markets such as LDPE, LLDPE, and HDPE. Moreover, with lower international demand, price increase was limited. Moving into the second week of June, the ethylene market had stabilized with no major shifts in supply and demand fundamentals and therefore, prices were unchanged.
At the same time, Germany's ethylene market fell by 2.3% in the first week of June. This bearish activity was primarily driven by lower domestic demand and slight decline in feedstock values impacting producer confidence. Downstream processors across the supply chain, especially in polyethylene, were conscious of poor offtake from packaging and automotive markets, hence purchasing activity was constrained. Spot activity was also subdued, accompanied by high inventory, which led to limited fresh buying. Consequently, ethylene suppliers lowered cracker run rates to match weakening demand and maintain a healthy inventory balance.
During the second week of June, German ethylene prices reversed course, rising 1.7% amid a stabilizing cost environment and improved market tone. Feedstock naphtha prices were stable, but downstream sentiments showed mixed signals. Downstream segment, LDPE demand largely remained poor, however stable supply levels ensured prices were largely unaffected while LLDPE experienced downward pressure from poor demand and competing imports, whereas HDPE registered a mild decline due to strong supply but showed tentative signs of demand revival.
Looking ahead, ChemAnalyst expects that ethylene prices in the USA will likely move up in the coming weeks of June, as firm naphtha costs, seasonal demand recovery and improving export inquiries from Asia. Meanwhile, ethylene prices in Germany will likely move down as slow downstream polyethylene demand persists, the potential for continued high inventories looms, and the availability of competitive-priced imports is increasing. Feedstock prices in Europe are expected to remain steady, which will provide limited cost-push support to downstream prices, thus driving cautious purchasing and domestic ethylene prices further downward.
