Quarterly Update on Global Ethylene 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.
Ethylene margins showed substantial improvement after witnessing a historic plunge in the second quarter in the Americas. Supply remained tight as several US crackers remained shut in their battle with Hurricane Laura and related storms with around 20 per cent still offline at the closing of Q3. US’ Ethylene margins got tripled since mid-May, with exports rising considerably on the back of recovering Asian demand and a continuing arbitrage. The demand for Polyethylene (PE) started emerging strong due to re-opening overseas economies and greater demand from the packaging sector. US Ethylene spot prices surged nearly by 60% since mid-May during Q3. Several US Polyethylene producers mainly Chevron Philips Chemicals, Westlake Chemical, Ineos Olefins & Polymers, INVISTA among others remained shut for specified durations during Aug-Sep period.
The European Ethylene market remained amply supplied despite some unplanned cracker turnarounds during the quarter ending September. The supply remained lengthened despite prolonged outage at 625,000 MTPA Borealis Stenungsund cracker in Sweden which is likely to resume operations in Q4 2020. The pricing curve remaining largely flat as the market kept quiet amidst battered economy. While improvement in derivatives demand from the construction sector and the automotive sector served well for regional suppliers, dullness in the packaging sector kept the sales pressured. The European Ethylene contract reference price for August was maintained at USD 950/t, up by USD 25/t from July.