For the Quarter Ending June 2022
Ethylene prices in the US market were consistently rising throughout the second quarter of 2022. The rise in the price of Ethylene was primarily due to the increasing price trend of feedstocks ethane and propane. The increase in ethane and propane costs was due to increased natural gas prices in the domestic market due to increased European export rates. At the onset of Russia's invasion of Ukraine, Europe sanctioned bans on Russian oil and gas imports, and the US stepped in to meet Europe's gas needs, leading to rising natural gas prices in the domestic market.
In the Chinese market, the Ethylene price dropped throughout the second quarter of 2022. The steady supply of feedstock Naphtha and Ethylene from Japan and South Korea abetted the decreasing trend of Ethylene prices in the Chinese market. Due to low operation rates in refineries, Chinese Naphtha prices were low due to the Covid-19-related lockdowns and weak demand from the downstream margins. The strong supply of feedstock, Crude oil, and natural gas assisted the decreasing price trend of Ethylene in China. In the Indian market, Ethylene prices eased during the start of Q2 2022, but the prices rose sharply nearing the end of Q2 due to high demand from downstream industries.
Ethylene prices in the European market rose at high rates during the first two months of the second quarter of 2022. The high energy prices in Europe owing to the sanctions on imports of Russian oil and gas contributed to the price hike of Ethylene in the European market. The high crude prices raised the cost of feedstock Naphtha. The price of Naphtha started to decrease at the end of Q2 2022 because of increased fuel production under high demand, which produced Naphtha as a by-product. The decreasing Naphtha cost during the end of Q2 2022 brought down the price of Ethylene during the same time period in Europe.
For the Quarter Ending March 2022
In North America, Ethylene prices decreased for the first quarter of 2022 with only a slight surge in January and then further declining in the upcoming months. The prices hovered around USD 829/ton- USD866/ton for Ethylene Spot FOB US Gulf. While there was a sudden fall of 18.8% in March in the USA. Q1 saw an overall decrease of 1.9% in the USA compared to the previous quarter of last year. Ease in refinery margins stabilized demand and continued supply chain disruptions throughout the quarter, albeit with improved rail car availability. Increased inventories and stockpiling caused the prices to deplete in the North American region.
During Q1 2022, Asia saw an increase in Ethylene prices where the price started at USD 1096/ton CFR Shanghai in China during the beginning of the quarter with a sudden spike of 10.5% increase in February. Naphtha-based crackers observed an escalation in production rates since mid-February as cost pressure from high oil prices has rendered refineries unable to realize any significant margins. Improved congestion at freight terminals and shipment cost was the reason for surging prices of Ethylene in India. Increased demand from downstream agrochemicals, cosmetics, and polymers sector and lesser supplies of raw materials in the market surged the cost of Ethylene.
Europe saw a fluctuation in the price of Ethylene during Q1 2022, with a sudden increase by the end of March in Italy and the UK in the middle of the quarter. Whereas the prices were observed to be increasing in Germany during the whole quarter with an increase of 5.4% compared to Q4 of 2021 and price hovering around USD 1371/ton and USD 1423/ton during February FD Hamburg. Cost pressure from upstream crude oil and gas prices could increase, which indirectly affected the price of ethane, propane, and butane. Mixed sentiments were observed in this quarter for Ethylene across Europe.
For the Quarter Ending December 2021
After reaching an annual high of around 1250-1300 USD per Mt during Q2 in the post-deep freeze period when many refineries were either forced to shut down or declare force majeures, spot Ethylene prices had reached to 55% of the Q2 peak and had settled at 765 USD per Mt FOB Houston in the last weeks of December FY21. The fall in prices of natural gas for the most part of Q4 played a significant role in lowering the prices of Ethylene. Production was cut down by refineries from the Q3 (August and September) levels as aggressive restocking and diversion of exports from Asia towards Europe post deep freeze meant that there was a surplus of C2 in the domestic markets entering Q4. Thus, supply outmatched demand through most of the last quarter of 2021 further contributing to the downward pressure on prices.
The outlook for Q1 of FY22 remains uncertain at least for the short term as global demand gets effected over concerns about the omicron variant spreading rapidly in most parts of the world. The deep winter freeze expected in the month of February could impact supply during Q1 just like the last year.
Asian Ethylene Market outlook for Q4 of FY21 could be summarized as volatile for the most part as the far east Asian region witnessed a surge in prices for the month of October owing mostly to the high cost of freight during that period as the region is import dominant. Average prices for Q4 were assessed at 1120 USD/ Mt for China on CFR Shanghai basis. The South-East Asian region too reflected a similar trend. The Middle East however witnessed a more stable market for ethylene with average price for Q4 at 1075 USD/Mt assessed on an FOB basis. Feedstock Naphtha prices during Q4 had also been assessed slightly higher compared to Q3 of FY21. Production was lower than the Q3 levels. India’s prices assessed on an Ex-JNPT basis averaged around INR 81500 for Q4 which is thirteen percent higher compared to the Q3 prices.
The outlook for Q1 of FY22 could be bearish taking into consideration the fall in prices in the opening weeks largely because of concerns over the new variant that had already led to strict lockdowns and quarantine measures in China and some South-East Asian countries. Prices are however likely to rebound in the second half of Q1 as global supply tends to fall during that period.
European ethylene market suffered from supply side constraints combined with higher freight costs during the first half of Q4 FY21. Imports from North America were quoted higher than the previous quarter with average prices of Ethylene in North-West Europe assessed at 1355 USD/Mt FD Hamburg which is a 10 USD/Mt higher than the previous quarter’s average. Demand from the downstream polymers industry like polyethylene and polyvinyl chloride had seen a marginal increment compared to Q3 although the month December witnessed demand tapering off from most of the end user industries.
The outlook for Q1 of FY22 is likely to be bullish considering the production cuts due to maintenance and deep freeze in the North American region which could affect supply in Europe.
In Q3 2021, Ethylene prices traced a downward trajectory during this quarter in USA, after gaining tremendous highs in the previous quarter backed by the ample availability of the product as industries operated at high efficiencies in this quarter. US Ethylene witnessed a whooping rise in mid-July across Texas and Louisiana backed by the unplanned outages. In August, despite the climate calamity in the Gulf Coast of US, prices gained stability owing to the resumption in the production plants with little or no delay after the Ida Hurricane aftermath. Therefore, the FOB-US prices of Ethylene hovered around USD 1025/MT to USD 910/MT from July to September. Surging demand from downstream sectors is anticipated to push the prices of Ethylene in the upcoming months.
Asian market witnessed an exponential rise in the prices of Ethylene in the third quarter supported by an unprecedented hike in the values feedstock Naphtha. In addition, Ida hurricane in USA caused supply chain disruption that led to the crippled availability of feedstock Naphtha in the region. The Chinese Ethylene market showcased mixed sentiments in the quarter aided by the supply chain disruption caused by various factors such as congestion at several ports of China along with the lower imports from US. However, players kept their inventories at low levels to keep the upbeat sentiments. Ethylene prices in Indian market remained influenced by the upstream crude value, lower import from the USA, and soaring freight charges due to the shortage of shipping containers. In India, tightened supply led to the scarcity of the product in the domestic market that contributed to the inflation in the prices of Ethylene during this period. Therefore, Ex Mumbai Ethylene prices were assessed at USD 1022.59/MT in India witnessed a hike of USD 130.78/MT from July to September.
In Q3 2021, European market faced mixed sentiments for Ethylene across the region. A marginal surge in the values of Ethylene was observed from July to August backed by the limited availability of the product and higher logistic costs. However, in the later half of the quarter, Ethylene prices fell taking cues from reduced consumer purchasing power and ample availability of stock in the region. FR Hamburg Ethylene prices rose to USD 1002 per MT in August showcasing a slight hike of USD 4 per MT since July and then a decline of USD 37 per MT is in September.
For the Quarter Ending June 2021
North America witnessed volatility in Ethylene prices during this quarter, backed by fluctuation in upstream crude values and uncertain demand from the global market. Revival in economic activities led to spike in demand for downstream polymers in USA. While due to insufficient plant operations, supply of downstream commodities remained short, and prices kept on rising throughout the quarter. The demand for Ethylene hovered toward the end of quarter, as the refining activities ran well, but the international demand declined with resurgence in pandemic cases in some European countries.
Asian market witnessed several price fluctuations during this quarter, which varied country over country. In India, Ethylene prices remained influenced by demand supply gap, resurgence in pandemic cases, upstream crude values and import-export activities. In April demand readily reduced due to sudden surge in pandemic cases in the country as it led to closing of market activities. In addition, in the mid of pandemic trading activities remained halted which also impacted the overall price dynamic in the country. Therefore, prices of Ethylene were accessed at USD 690/MT and USD 843.2/MT for China and India respectively during first week of June. In China, market also remained volatile that led to several negative fluctuations in the quarter, but most of the fluctuations were supported by supply gap in the country amidst demand stability.
European market faced mixed sentiments during this quarter for Ethylene across the region, as the demand fluctuated with resurgence in pandemic cases. Downstream polymer prices kept on rising during this period due to inadequate spot availability amid stable to firm demand from downstream end users. However, Ethylene prices kept fluctuating with changing crude values in the global market, where overall outlook remained bullish for Ethylene during this quarter for the European market.
For the Quarter Ending March 2021
The Asian market faced huge demand for Ethylene and its derivatives from downstream sectors which significantly supported its prices. In China, Ethylene demand suddenly surged after lunar holidays, but tight supply boosted the prices. Meanwhile, South Korean Hanwha’s 310 KTPA manufacturing unit went for partial shutdown in March. This shutdown was implemented to expand its production capacity and it is anticipated to resume its operation in early Q2 2021. Furthermore, in February 2021, Sinopec Yangzi petrochemicals in China, shut down its naphtha cracker of production capacity 450,000 tonnes Ethylene per year for maintenance, which later resumed its operations in March. Amid high demand from downstream products manufacturers, lower supply spiked up the prices of Ethylene across the region. In India, supply shortages during January to February pushed up the prices of Ethylene to USD 854 per MT which later came down again to USD 828 per MT in March in effect of improvement in supply activities.
North America struggled to satisfy rising demand of Ethylene as several production facilities faced force majeure and unplanned shutdowns during Q1 2021. Eastman chemicals at Longview, Texas suspended its operations after arrival of icy weather during February. Its plant capacity is 730,000 MT Ethylene per year. Meanwhile, INEOS also has undertaken its Ethylene plant of capacity 1.88 million MT per year off stream located at Texas. Similarly, several other plants dented the regional supply chain of Ethylene that skyrocketed the prices of Ethylene and its derivative products globally.
The European market had a firm demand from downstream sectors, though the supply remained tight due to several reasons. Container shortages reduced the exports and imports of feedstock materials across the region and some unplanned outages reduced the global supply for Ethylene. Price trend in Europe overall remained up, amid high demand and constrained product availability.
For the Quarter Ending September 2020
Ethylene sentiments were heard muted-to-low, entering the third quarter on the back of ample supplies and stable demand. Sharp reduction in prices was observed in the first half of the quarter with offers bidding around USD 750-800/t CFR northeast Asia for July & August. However, as several major producers went temporarily offline by the end of the third quarter to balance out their inventory levels, supply started getting tightened. Singapore-based ExxonMobil shut its 1mn tpy cracker for its long overdue maintenance in mid-September till the end of October. To ease supply side issues, buyers in Southeast Asia were seen opting for deep-sea and Middle East origin cargoes. On the demand front, spot demand was bolstered by improved PE operations due to the expected return in demand during the peak season in several Asian countries.