Deteriorating Demand Fundamentals Pressurized the Global Ethylene Prices

The weaker inquiries from the downstream sectors and the ongoing global macroeconomics challenge have dampened the market sentiments toward Ethylene. As per the latest data, prices of Ethylene have shown a marginal decline worldwide.

Recent data shows Ethylene prices in the Japanese market have been stable at USD 1065/MT FOB Tokyo, supported by the low raw material Naphtha cost. Besides, purchasers hesitate to make big procurements, and the overall slack demand motivates buyers to push towards lower prices. In addition, one of the major manufacturers of Ethylene, ENEOS Corp. in Kawasaki, Japan, having a capacity of around 540,000mt/year, has shut down its plant temporarily. Currently, there are limited to no ramifications of the shutdown. However, prolonged closure may impact supply dynamics in the coming quarter.

On the other hand, the rising input cost in the European region has impacted the manufacturing costs of several commodities, including Ethylene. However, the data from Gas Infrastructure Europe depicts that Germany has secured the gas supplies for winter consumption and its gas storage sites were 90% occupied. Furthermore, the market players have reported that the market transactions were average and downstream consumer purchases from the Polyethylene industries were mainly based on demand. The ChemAnalyst data shows that the Ethylene prices have demonstrated a declination of USD 10 per ton on the week ending 16th Sep amid the weaker demand fundamentals in the domestic region.

Meanwhile, in the United States, Ethylene prices drifted lower on the back of weak upstream Natural gas values. As per the market sources, manufacturers have sufficient availability to cater to domestic demand. Although, demand from the downstream Polyethylene and other allied industries has other facets for the price drop in the domestic market. Hence, as a result, Ethylene FOB US Gulf prices were assessed at USD 760/tonne during the same time frame. One of the major manufacturers of Ethylene, Lyondell Basell, in the USA, has dropped its Ethylene prices.

According to the ChemAnalyst estimation, “prices of Ethylene will further follow the downward trajectory in the global market in the wake of the low demand from the downstream Polyethylene industries. Meanwhile, high energy cost coupled with fluctuation in the upstream values may impact the price dynamics of the Ethylene in the upcoming weeks.”