For the Quarter Ending June 2023
Ethylene prices have shown a mixed trend in the USA market during the second quarter of 2023. During April, Ethylene prices have significantly increased, supported by the moderate demand and inadequate inventories amidst plant shutdowns. The inquiries from the downstream Polyethylene and Glycol value chain industry have remained stable in the domestic market, while the availability of finished stocks of Ethylene has remained inadequate, which promoted the manufacturers to keep their prices in an upward trend throughout the month. In addition, Motiva Enterprises in Port Arthur, Texas, having a production capacity of 1,660 M Lbs/year, shut down its Ethylene unit on 1st April 2023 due to unplanned maintenance. On the other side, Shintech in Louisiana remains shut down at its 1,100 M Lbs/yr. Due to compressor complications, the ethylene unit in Plaquemine, LA, resulted in limited material availability in the domestic market. However, after the bullish run, Ethylene prices showcased a bearish rally in May and June amidst tepid demand and sufficient inventories in the domestic market. The oversupplies of feedstock Ethane have limited the positive development of Ethylene. In addition, the demand from the downstream polyethylene industries has remained weak, and the market transactions were mainly on a need-on-demand basis. Furthermore, macroeconomic factors such as restrictive interest rates and tightening credit from the regional banking turmoil have a cumulative impact on the downshift observed in the price realization of Ethylene in the domestic market.
Ethylene prices have continued to decline in Japan (a major exporter of Ethylene) throughout the second quarter of 2023, supported by the weak feedstock and limited demand. The cost pressure from the feedstock Naphtha was limited as Naphtha prices reached a 2-year low, reported by the market participants. The high inflationary pressure, volatile energy prices, and slow economic recovery of China (a major importer of Ethylene) have further deteriorated the market growth of Ethylene in the Japanese market. On the demand front, inquiries from the downstream Polyethylene industry have been slower- than- expected in the domestic and international markets amidst weak buying trends among the end-users. In addition, the major Ethylene Idemitsu Kosan Company Limited manufacturer in Ichihara, Japan Chiba, having a production capacity of 413,000MT/year, shut down its Ethylene unit on 27th March 2023 for a maintenance turnaround. At the same time, Asahi Kasei, Mizushima, Japan, having a production capacity of 570,000 MT/Year, shut down their Ethylene cracker at the end of May 2023 amid maintenance shutdowns. Further, Mitsui Chemical, Chiba in Japan, having a production capacity of 612,000 MT/Year, has shut down its Ethylene cracker on 17th June 2023 amid unplanned shutdowns. Despite the plant shutdown, the availability of Ethylene remained sufficient to cater to overall downstream demand, thus supporting the Ethylene prices to follow a downtrend in the domestic market.
Ethylene prices have remained gloomy in the European market throughout the second quarter of 2023, backed by reduced production rates and limited downstream demand. The cost support from the feedstock Naphtha has been inadequate as its prices progressed in a downward trend in the given time frame. In addition, the energy Natural gas prices have dropped amidst weak end-user consumption and sufficient storage in the regional market. Furthermore, macroeconomic uncertainties like high inflationary pressure and rising interest rates by the European central bank to combat inflation have further deteriorated the market growth of Ethylene in the region. Demand from the downstream polyethylene industry has remained tepid in the regional market, with limited buying appetite noted across end-user industries. Market participants reported that demand for Ethylene will continue to decline further ahead of the summer holiday period. However, in an attempt to curtail consistent oversupply, producers have reduced their operating rates by 70-80%. In the meantime, import flow has been steady on the European ports as demand in the Asian market remained sluggish, and Asian exporters looked to send material onto European shores to take advantage of better arbitrage. This has led to sufficient inventories on the European shores.
Ethylene prices have continued to decline in the Saudi Arabian market throughout the second quarter of 2023, supported by weak demand and sufficient inventories. The cost pressure from feedstock Naphtha has been inadequate as its prices progressed downward in the given time frame. On the demand side, the inquiries from the downstream Polyethylene industry have subdued as consumption from the packaging as well as from the plastic industry has weak. Thus offtake of Ethylene has declined. At the same time, demand from the overseas market has also decreased amidst global economic uncertainties. In addition, Sadara Chemical in Al Jubail, Saudi Arabia, with a 1.5 million MT /year plant capacity, restarted its Ethylene unit in April 2023. The unit was shut down in Early February 2023 amid maintenance turnarounds. Furthermore, despite the weak downstream demand, the operating rates have remained normal in the domestic market as manufacturers speculate the further rise in demand. Moreover, the availability of finished stocks of Ethylene has remained sufficient to cater to overall downstream demand, supporting the downshift in the prices of Ethylene in the domestic market. The market participants reported no supply disruptions or port congestion in the given time frame.
For the Quarter Ending March 2023
Ethylene prices showed fluctuation in the USA market during the first quarter of 2023. During the initial quarter, Ethylene prices dropped in the USA market. The decline in the prices was attributed to the sluggish demand from downstream polyethylene and glycol chain industries as consumer sentiment continued to remain weak in the US region due to ongoing holidays and sluggish growth of key end-user industries, including packaging industries amid seasonal dullness, while the inventories remained adequate to cater the overall demand. Although, during the mid and final quarter of 2023, Ethylene prices have gained upward momentum due to improved demand from the downstream industries and limited supplies in the market. Consumption from the downstream polyethylene and glycol value chain has also slightly increased, while the limited supply in the region forces the manufacturer to raise their price quotation. Additionally, Nova Chemicals has increased its polyethylene (downstream) prices due to force majeure on its polyethylene after an unplanned outage at its Corunna ethylene cracker in Sarnia, Ontario, Canada, has proportionally impacted the prices of Ethylene. Thus, prices of Ethylene FOB US Gulf were settled at USD 491/MT during March.
During the first quarter of 2023, Ethylene prices have witnessed mixed sentiments in China. During January, Ethylene prices have inched lower due to weak demand from the downstream polyethylene industry and adequate supply in the region. In addition, import availability of Ethylene remained steady in Chinese ports from South Korea, Japan, and other exporting countries; thus, inventory levels have been termed as sufficient in the domestic market. Although, during February and March, Ethylene prices have increased since the conclusion of the Lunar New year Holidays as market participants restocked the material available in the market. In addition, consumption from the downstream polyethylene glycol value chain has improved substantially, thus increasing the demand pressure on Ethylene availability. The replenishment of downstream stocks has catapulted the demand for Ethylene. Furthermore, a major manufacturer of Ethylene, Zhejiang Petroleum and Chemical (ZPC) in Zhoushan, Zhejiang, China, having a production capacity of 1.4 million MT/year, took off-stream its No.2 cracker in early February 2023 for maintenance. On the other hand, PetroChina completed trial runs at a 1.2 million tonne-per-year ethylene facility in its newly launched refinery complex in south China, which may improve the supplies of Ethylene in the market. Thus, prices of Ethylene CFR Shanghai were settled at USD 926/MT during March.
Ethylene prices showed mixed sentiments in the European market during the first quarter of 2023. Initially, Ethylene prices remained stable due to consistent demand from the downstream polyethylene industry and ample supply in the region. However, in the mid-quarter, Ethylene prices increased significantly after the holidays as market participants replenished the available material in the regional market. Moreover, the rising feedstock Naphtha prices increased the production cost of Ethylene in Europe. Furthermore, the imported Ethylene prices remained comparatively higher than the regional prices as prices continued to rise in the Asian market. Despite this, the demand from the downstream polyethylene and glycol chain industry remained stable in the regional market, and market participants reported limited instances of new orders. However, during the final quarter of 2023, Ethylene prices experienced a downtrend backed by weak downstream demand and firm supply in the region. The imports from the Asian market remained firm, which led to better material availability in the region. Additionally, energy prices continued to drop, further weighing down the prices of Ethylene in the regional market. As a result, the prices of Ethylene FD Hamburg were settled at USD 940/MT during March.
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.
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.
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.