Ethylene Prices, Markets & Analysis

Ethylene is the starting point for so many chemicals that have such an impact on our daily lives from polyethylene (PE) used in packaging, pipes through to ethylene glycol (EG) used in polyester and antifreeze.

Europe’s ethylene landscape has been more fluid and dynamic over the past two years than ever before. The advent of low oil prices in Q4 2014 led to record cracker margins, strong demand, and increased operating rates, which in turn was considered a factor in the unprecedented number of production problems in 2015.

Prices usually track crude oil and naphtha market developments very closely but the supply and demand situation can play a large part in determining contract and spot prices because of the challenges inherent in producing, transporting and consuming a gas.

European contract prices hit a bottom of €810/tonne in March 2016 but have been on a steady uptrend for the most pary since then, gaining 16% largely on the back of a string of planned – and sometimes unplanned – cracker production issues. European spot price developments over the past year have been tumultuous, falling about 21% in the first quarter, rising again by almost 30%, and then settling back as supply has eased.

ethylene prices, markets and analysis

Ethylene Market Overview

Updated to Q3 2016

During the third quarter, the cracker turnaround schedule in Asia will keep regional supply restricted but this could be counterbalanced by the restart of Shell’s cracker in Singapore – currently it is scheduled to restart in July. The slowing down of a number of derivative units in China ahead of the G20 summit in the second half of August in will be offset by similiar reductions at crackers but demand is likely to be strong either side of the slowdown to compensate, and firm prices will continue to attract Middle East volumes.

Meanwhile in the US, supply is expected to ease with the heavy spring turnaround season drawing to a close, but demand is also likely to remain strong as derivatives replenish inventories.

There is limited maintenance due in Europe but balances are already tighter than expected moving into the quarter following recent hiccups which impacted on the turnaround preparations, nevertheless, the supply/demand balance should improve. There are concerns about the performance of polyethylene (PE) going forward but there has been no impact so far on cracker operations – producers remain upbeat over cracker margins.

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