In December 2025, demand for ethylene in the United States strengthened significantly. Spot prices on the US Gulf Coast rose 2.7% during the first week of December, indicating a more optimistic outlook for the market. This increase was driven by higher feedstock prices, improved operating conditions at Gulf Coast steam cracker facilities, and tight inventory levels, which enabled producers to pass along increased costs with limited pushback from customers. Ethylene production utilization rates in Texas and Louisiana returned to a mid-range level as most facilities returned from planned maintenance and there have been few unplanned outages plus the steady addition of new ethylene production capacity created balance in the supply chain. Demand continued to grow in several key downstream sectors with packaging and polyethylene producers ramping up purchasing due to expected seasonal peaks in shipping volume as well as construction and infrastructure programs supported by governmental funding creating increased demand for PVC.
The December 2025, US ethylene market has started heating up. The US Gulf Coast's spot prices was up 2.7% in the first week of December. This upswing indicated that there is general optimism in the marketplace for December, attributed to increased feedstock prices and improved operating conditions across Gulf Coast steam crack facilities. While there were limitations to the increase, due to a combination of reduced inventory levels and bolstered underlying demand fundamentals, sellers passed on increased costs, indicating confidence in future demand for ethylene.
The dynamics of ethylene supply chains influenced the perception of the market significantly. Cracker margins were still adequate for Continued operation as seen in the average annual utilization rates of the Texas and Louisiana cracker plants, averaging in the mid-percent range due to most units coming back online following monthly schedule maintenance in November. The significant absence of any major, unplanned downtime and new capacity increases in the domestic cracker market added to supply, allowing producers to have pricing power with the diminished supply of natural gas.
Higher sales of ethylene across many downstream industries experienced as a result of seasonal peak holiday shipping preparation by packaging converters and increased buying activity from polyethylene producers. This increase in buying activity of ethylene was due to PVC manufacturers' businesses being involved in residential construction & industrial infrastructure development due to government assistance programs. An increase in call-off orders from producers using ethylene derivatives for production of vehicles was attributable to the manufacturers’ anticipation of new model-year production plans.
Furthermore, demand perspective for ethylene from international markets, due to reduced access to the local marketplace caused buyers in Europe and the Northeast Asia to rely on US products after several cracker shutdowns created a shortage of ethylene in these areas. Also, while the currency exchange rates created strong pressure for buyers in Latin America to find cheap products to offset their local markets, they re-entered the spot market when they found low-cost alternatives in the form of US produced ethylene. Trading of various derivatives was active enough to deplete a portion of the inventory of ethylene that had been created, thus limiting buyers’ ability to resist higher prices.
Despite many natural gas-style withdrawals during an overall positive year for ethylene and subsequent production of polyethylene, several counterbalancing forces remain at play, such as relatively good feedstock availability and a slight increase in chemical inventories as measured by the inventory-to-sales ratio. Even so, tight derivative inventories and improving resin operating rates continue to support the current state of market sentiment, which indicates that ethylene prices are likely to remain firm during the next several months due in large part to strong cracker performances stabilizing the supply side of the equation.
