Slow Downstream Demand Drives the Ethylene Prices in the USA and European Market

The Ethylene market showed bearish sentiments in the USA and Europe during the last week of November 2022, supported by the stable to weak demand and low feedstock prices coupled with weak imported costs.

As per the data, prices of Ethylene have plunged by 2.1%, 2.3%, and 2.6% in Italy, German, and the UK, respectively, bolstered by the continual weak cost support and stability in the energy prices. Cheaper Asian imports, along with the ease in the freight charges from Asia to Europe, have supported the current price trend of Ethylene in the regional market. On the raw material front, Naphtha prices have been sluggish in the regional market in the previous week, which resulted in a decline in cost pressure on Ethylene. Meanwhile, as Europe prepared for the upcoming winter, natural gas prices have reached pre-Russian Ukraine war levels.

Additionally, demand from the downstream polyethylene and glycol chain industries has continued to remain on the stable to weak side amid low consumer confidence in Europe. Moreover, downstream companies' have sufficient inventory levels, which forces producers to reduce stock levels by lowering the prices. However, German economic sentiments have improved in November 2022 compared to the previous month, which could allay immediate fears of a global recession. According to ifo, the Business climate index increased from 84.5 points to 86.3 points in November 2022. In conclusion, prices of Ethylene FD Hamburg were settled at USD 860/MT on 25th November in the German market.

However, Ethylene prices remained unchanged in the USA market, owing to the sufficient supply to meet the overall demand. Furthermore, the market participants reported regular consumer purchasing activity and a balance between supply and demand, maintaining the Ethylene price in the domestic market. In addition, minimum to no variation in the offtake from the end-user polyethylene and glycol chain industries caused the price of Ethylene to roll over. As a result, Ethylene spot FOB US Gulf prices were assessed at USD 485/MT during the week ending 25th November 2022.

According to ChemAnalyst anticipation, "Ethylene prices will likely follow the downtrend in Europe and the USA market due to further decline in the feedstock Naphtha prices. Demand from the end-user polyethylene and allied industries will be expected to remain lackluster ahead of the holidays. Meanwhile, natural gas prices in Europe may increase amid strong demand."