The price of ethylene rose in US markets during mid-January 2026 due to tighter supply in the Gulf Coast and continued improvement in demand conditions that created a bullish outlook for ethylene. Increased inquiries, coupled with strengthening export activity from Canada and Europe, helped draw commodity molecules away from US trading pools and keep export terminals busier. While ethane feedstock has been structurally low-cost due to shale development, this strength was not enough to overcome an influx of new buyers interested in paying more for ethylene molecules, which significantly increased sellers' margins. Polyethylene producers restocked their inventories after the holiday season and purchased ahead of upcoming resin contracts. Furthermore, planned maintenance outages during the first quarter of 2026 will further bolster strong pricing in January 2026, and near-term pricing will remain firm if supply continues to be limited and there is continued strong interest in exporting.
January 2026 opened on a decidedly bullish footing for ethylene prices in the U.S. market, with spot assessments along the US Gulf Coast climbing as tighter supplies and robust demand dynamics put upward pressure on the key petrochemical monomer. Traders reported prompt ethylene availability tightening as steam crackers recovering from December outages gradually ramped up output, drawing spot volumes lower and underpinning firmer pricing. At the same time, export interest from Canada and Europe picked up notably, pulling ethylene cargoes away from domestic inventories and giving sellers additional leverage for higher offers.
The operations of plants situated on the Gulf Coast have somewhat recovered since the end of December; however, most of their facilities were still only operating at partial capacity as of early January. Thus, the amount of ethylene flowing into the market has been tapering off, as has the amount of available ethylene on the prompt spot market. Even though the price of the alternative feedstock, naphtha, has declined dramatically during this time, the low-cost feedstock used in most of the U.S. ethylene crackers has made this feedstock cost relationship practically negligible.
Therefore, the economics associated with producing ethylene continue to be very connected to the eventual restart of the facilities. Also, since several planned turnarounds will occur within the first quarter, which are expected to result in a reduction in excess capacity of more than one million metric tons per year, the producers will keep their ethylene offers firm, even though the inventory levels at the export terminals are beginning to decline.
Polyethylene converter companies have been restocking their inventories after the new year; therefore, the Ethylene demand has improved, and many of these converters are now purchasing their Ethylene monomers ahead of their new resin contracts. The increased incentive for exporting Ethylene to Canada and the Netherlands also contributed to an increase in shipments from the Gulf Coast of the U.S., which further tightened the current supply and demand of Ethylene.
As per analysts, a combination of ongoing restocking of feedstocks into the industrial supply chain and increases in demand from importers caused stronger purchasing in early January, outweighing any lingering concerns about feedstock costs. Aspects of the global ethylene market continue to face weakness in certain regions due to softness in the demand for PEs; however, the fundamentals in the U.S. support the production of ethylene through active arbitrage activity and limited growth in production capacity because of delayed recovered production from crackers.
According to the ChemAnalyst database, the growth in the supply of natural gas is the most important market-determining factor for ethylene producers. Uncertainty around sustained future growth in the production of ethane can limit expansion potential for ethylene production capacity in 2026, regardless of fluctuations in other commodity markets.
