Ethylene Asia

Ethylene spot prices kicked off the first quarter on a strong note, rising to a four-and-a-half-year high of above $1,400/tonne CFR NE Asia by late February. Producers in South Korea had limited spot cargoes available, because of stronger domestic demand on the back of a rise in polymer production in January and February.

Higher ethylene prices in Europe and the US partly due to both planned and unplanned cracker shutdowns also resulted in Asian producers selling their cargoes to both markets, keeping supply in Asia snug, sources said.

However, the price gains are unsustainable. Producers of key ethylene derivatives such as polyethylene (PE), vinyls and monoethylene glycol (MEG) were unable to pass on the increase in raw material costs because of weak derivative demand, notably from the key China market.

Asian ethylene prices were largely declining from March onwards, as the tight supply had eased following the restart of key crackers in Abu Dhabi and Saudi Arabia after their turnarounds. Furthermore, outages and turnarounds at derivative plants in Japan and South Korea weakened domestic demand, leading to more supply available for export. This exerted downward pressure on ethylene spot prices as a result.

In addition, the decline in feedstock naphtha prices in late April triggered a downward adjustment in monomer prices. Ethylene was assessed at $1,150-1,190/tonne CFR NE Asia by mid-May, down by more than $200/tonne from the start of the first quarter.

Updated to mid-May 2013