During the first half of August 2025, the ethylene market experienced divergent trends in the U.S. and Europe. The U.S. was moving from a 12-week strong bullish run to a bearish trend, induced not by increasing demand, but by declining naphtha prices and weak export demand while feeling some oversupply pressures. Domestic demand was steady at a decent level. Europe enjoyed modest gains early on based mainly on steady LDPE demand and experienced their biggest rebound in week 3 when cracker maintenance and port congestion around Europe squeezed supplies. It seems Europe's prices could be held firm while U.S. prices may continue under downward pressures.
The ethylene market witnessed contrasting movements across key regions in the first half of August 2025, with the United States clearly turning a corner back from a bullish trend and the European market reflecting stronger activity from congestion and supply disruptions.
The month started off positively in the U.S. with ethylene prices continuing a sustained 12 weeks of increase, partly supported by rising naphtha and crude oil prices. The ethylene price power was driven by geopolitical tensions, particularly firm US sanctions on exports of Russian and Iranian origin oil as well as speculation about OPEC cuts. Ethylene production domestically remained stable and while there remained ongoing drawdowns and residual recovery from plant maintenance, this combined with a steadier demand environment provided only slight supply tightness. Demand for ethylene continued steadiness from LDPE, LLDPE, and HDPE, especially in the packaging and industrial level. On the other hand, export markets were not nearly as positive, as buying sentiments from key buyers, including China and Indonesia remained weak, limiting the broader price increases to parts of the market.
Ethylene prices showed some weakness by the end of the second week of August with the decline, mostly due to a notable drop in naphtha cost. Margins were squeezed, and downstream demand had mixed signals such as sector LDPE slightly improved, HDPE stayed consistent, and LLDPE weakened. Export activity stayed sticky amidst geopolitical uncertainty which caused both the ethylene producer and buyer to be cautious with production and procurement due to oversupply fears and energy sector volatility.
The U.S. ethylene market had shifted from bullish to bearish territory by mid-August. The market was weighed down by falling crude prices, along with general concern about oversupply. The demand for LLDPE weakened while the demand for LDPE and HDPE remained stable. With high operating rates and inventories rising, logistical issues appeared to be somewhat insignificant. Export demand for ethylene remained weak, and buyers exercised caution in their procurement strategies. Overall market fundamentals showed continued softness, and expectations of further downward pressure in the near term.
The ethylene market in Europe made modest gains during August's early stages, primarily due to healthy demand for LDPE and balanced supply. However, in the second week of August, prices fell slightly on weakened performance in HDPE and LLDPE, as well as lower feedstock costs pushing prices slightly downward. Ethylene buyers were cautious of the market and didn't purchase a lot. Last week they reversed the price decline, as cracker maintenance and extreme congestion at ports curtailed production and supplies within Europe. HDPE demand picked up, especially in packaging grade products, and LDPE and LLDPE remained firm. The ethylene supply balance tightened as they began purchasing again as demand remained firm, and the U.S. market began to soften.
Given high operating rates and weak export demand, ChemAnalyst expect ethylene price to be under further downward pressure in the U.S. On the other hand, European ethylene prices may get firmer due to supply constraints amidst maintenance and continuing port congestion, but should softening in downstream demand emerge, it may serve to limit further price gains.
