Updated to mid-November 2009
Asian market review by Peh Soo Hwee, ICIS pricing
Ethylene spot prices in Asia were hovering at three month highs by the end of the quarter to mid-November under review, underpinned by limited supply from the Middle East and a healthy derivative polyethylene sector.
Unexpected outages at Marun Petrochemical and Jam Petrochemical’s crackers in Iran in October continued to hamper the delivery of term cargoes, and prompted short-covering activities by traders in the market.
Firm feedstock naphtha prices, which touched a one year high of above $700/tonne in November, also lent support to ethylene values. Prices in northeast Asia (NE Asia) were traded at $1,000-1,020/tonne CFR (cost and freight) in mid-November, up $40-50/tonne from levels at the start of the quarter.
Ethylene also edged $10-20/tonne higher to $1,000-1,060/tonne CFR SE Asia (southeast Asia) over the same period.
European market review by Nel Weddle, ICIS pricing
The European ethylene market remained fairly strong in the mid-August to mid-November period. Cracker margins were at their best in September and October as spot levels rose because of ongoing production issues and cutbacks, and as the latest raft of scheduled maintenances got under way.
The August contract settled at €795/tonne FD (free delivered) NWE (northwest Europe), but September settled higher at €875/tonne FD NWE on the back of tighter availability, better demand forecasts and firming naphtha values. The September contract turned out to be the peak of the year with a small decrease given away in October (€860/tonne) and again in November which settled at €833/tonne as feedstock softened, crackers came back online and demand started to tail off because of the year end
Imports from the US and Mexico were a regular fixture for the European market during the summer period with at least 4-5 cargoes booked into Europe per month. Import levels were cheaper and for some economics dictated that it was cheaper to buy a deep-sea cargo than restart or ramp-up cracker operating rates. On average however, European rates were pegged at around 80-85% of nameplate capacity in August and September, although some maintenances meant that others could max rates.
BASF announced that it would restart its idled Ludwigshafen 1 cracker - idled since April - and Repsol restarted its Sines Portugal cracker in October after it had been shut down for economic reasons in June.
The market began to soften at the end of October moving into November as supply showed signs of outstripping demand in the run-up to the year-end. However, firm crude and naphtha values kept the pressure up on cracker operators.
US market review by William Lemos, ICIS pricing
US ethylene contracts for October settled 2.75 cents/lb ($61/tonne) higher, lifted by higher production costs throughout the month.
Ethylene for October settled at 37.25 cents/lb, up from 34.50 cents/lb in September.
Market participants had expected contract prices to drop on weaker demand, but a jump in energy prices offset the slowdown in consumption.
Spot ethylene in early November traded at around 33.00 cents/lb, up from about 28.00 cents/lb a month earlier and an average of just over 21.50 cents/lb in July.
Webinar - Understanding Ethylene margins
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Ethylene is the raw material used in the manufacture of polymers such as polyethylene (PE), polyester, polyvinyl chloride (PVC) and polystyrene as well as fibres and other organic chemicals. These products are used in a wide variety of industrial and consumer markets such as the packaging, transportation and construction industries.
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Ethylene is produced commercially by the steam cracking of a wide range of hydrocarbon feedstocks. In Europe and Asia, ethylene is obtained mainly from cracking naphtha, gasoil and condensates with the coproduction of propylene, C4 olefins and aromatics (pyrolysis gasoline). The cracking of ethane and propane, primarily carried out in the US, Canada and the Middle East, has the advantage that it only produces ethylene and propylene, making the plants cheaper to construct and less complicated to operate.
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