For the Quarter Ending December 2022
North America
Ethylene prices have shown a see-sawed trend in the USA market during the fourth quarter of 2022. During the mid-quarter, Ethylene prices have witnessed a downtrend due to the weak demand from the downstream polyethylene and glycol chain industries. Feedstock Naphtha prices have decreased, which eased the production cost of Ethylene in the regional market. Although, during the mid-quarter, Ethylene prices improved owing to the high feedstock Naphtha prices. Demand from the downstream industries has revived slightly, resulting in increased prices. Furthermore, the supply chain has been impacted by the labor shortage and vessel bunching, thus limiting the material available in the region. Although, during the final quarter, Ethylene prices dropped due to the bearish demand from the downstream industries ahead of the seasonal dullness. In addition, a major manufacturer of Ethylene, Dow Chemical in Freeport, Texas, USA, has a capacity of around 725,000 Tons/year and experienced compressor shutdown amid a burst of sub-freezing weather, which impacted its production cost.
Asia- Pacific
Prices of Ethylene showed mixed sentiments in the Chinese market during the fourth quarter of 2022. During the initial of Q4, Ethylene prices showed a downward trend backed by excessive supply and weak demand. Furthermore, the ongoing lockdown measures in major cities amid rising pandemic cases lead to uncertainties in production, operation, and logistics. This exerted downward pressure on the end-user demand. Overall, consumption from downstream polyethylene, glycol chain, and other competitive industries has continued to remain on the weak side. Meanwhile, the cheap imports from South Korea, and Japan, have led to the better availability of the product. Although, Butadiene prices rebounded during the mid-Q4 because of the supply constraint, disrupted supply chains, and improved demand. Overall tighter supplies and limited inventories led to the price increase in the Chinese market. Further, during the final Q4, Ethylene prices gained stability due to the stable demand and supply dynamics. Thus, Ethylene CFR Qingdao was assessed at USD 873/MT during December.
Europe
Ethylene prices showed a mixed trend in the European market during the fourth quarter of 2022. During October, Ethylene prices dropped sharply by 8.8% owing to the weak cost pressure from the feedstock Naphtha prices. Moreover, demand from the downstream Polyethylene and Glycol value chain has slumped amid the high inflation rate in Europe. According to the Eurostat data, the European inflation rate increased from 9.1% to 10% in September 2022 compared to the previous month. However, during December, Ethylene prices rebounded. The domestic production cost has remained increased amid high energy and operating costs, resulting in weak output rates. In addition, the high cost of raw material Naphtha has resulted in the price increase. Despite this, demand from the downstream industries has remained on the weak side. Also, the major manufacturer of Ethylene, LyondellBasell, has announced that the Ethylene cracker at its integrated olefins and polyolefins production site in Berre, France, will not restart until early 2023 due to the persistently high energy costs, compressing margins, and falling demand for Ethylene in the region. Although during November, Ethylene prices again started to drop due to the lackluster demand from the end—user sector. The supply has been supported by cheap imports from the Asian market, which led to better product availability in the regional market. Meanwhile, domestic production cost has also stabilized amid stable energy prices in the region. In conclusion, prices of Ethylene FD Hamburg were assessed at USD 832/MT during December.
For the Quarter Ending September 2022
North America
Ethylene prices have been on a downward trend in the US market throughout the third Quarter of 2022, owing to the soft feedstock Naphtha prices and ample inventory levels amid weak downstream demand. Speculation of recession across the USA market has dampened the demand from the downstream Polyethylene and Glycol value chain. The performance of the packaging industry has been underwhelming during Q3; thus, the demand for PE and PP has remained weak throughout the Quarter. The ease in the upstream Natural gas prices has reduced the production costs of Ethylene across the regional market. In addition, the downstream market players have reported large stockpiles of unsold inventory, resulting in a cheaper spot market for Ethylene in the domestic market. As a ripple effect, Ethylene FOB US Gulf prices were offered at USD 487/MT, with a monthly decline of around 10.8% during September 2022.
Asia- Pacific
In the Asian region, prices of Ethylene have shown a mixed trend throughout Q3 of 2022. During July, Ethylene prices dropped by 3.3%, supported by sufficient inventories coupled with low demand from the downstream Polyethylene and other allied industries. However, during August and September, Ethylene prices rebounded due to the mounting inflation across the region. High Feedstock Naphtha and mounting energy prices have resulted in the high production cost of Ethylene across the regional market. In addition, LG Chem in Yeosu, South Korea (a major exporting country) has shut down its cracker due to a maintenance turnaround, resulting in a supply shortage across the region. Hence, as of September 2022, in South Korea, prices of Ethylene FOB Busan were assessed at USD 1095/MT.
Europe
Since the Russia-Ukraine war has risen, European countries have faced strong headwinds amid a crisis in natural gas supply and high inflationary pressure. The limited natural gas supply has inflicted downside risks on the manufacturing capacities of the downstream sectors. Ethylene prices have continued their bearish rally in the European market during the third Quarter of 2022, owing to the substantial availability of upstream Naphtha. The latest decline in the trend has been caused by a constant flow of cheaper imports from the APAC and North American regions. The domestic cost of production remains higher owing to mounting energy and operations costs, resulting in weak output rates. Demand from downstream Polyethylene and other allied industries has been weak due to growing speculations around recession deterring consumer sentiment. Also, the inflows of new orders dropped as demand for Polyethylene continued to decrease. In addition, LyondellBasell has reduced its operating rates to 60% in Germany amidst weak demand and high natural gas prices. Hence, prices of Ethylene FD Hamburg were assessed at USD 1000/MT during September.
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.
