Ethylene Methodology
Ethylene is a colourless, odourless, extremely flammable compressed gas. It is slightly soluble in water and soluble in liquid hydrocarbons. It reacts with strong oxidants causing fire and is an explosion hazard. It may polymerise to form aromatic compounds under the influence of temperatures above 600°C.
Around 59% of the world’s ethylene demand is consumed in polyethylene production. Other major derivatives are ethylene oxide/glycol (13%), ethylene dichloride/vinyl chloride monomer (13%) and ethyl benzene/styrene (6%), with other uses such as acetaldehyde, alpha-olefins, ethylene-propylene elastomers and vinyl acetate representing around 9% of demand.
Although ethylene gas poses no risk to skin or eyes, the ethylene liquid can cause frostbite. Ethylene is a dangerous fire and explosion hazard. Exposure to ethylene occurs through inhalation, from leaks, spills, accidents, and cigarette smoke. While ethylene gas is invaluable due to its ability to initiate the ripening process in several fruits, it can also be very harmful to many fruits, vegetables, flowers and plants by accelerating the ageing process and decreasing the product quality and shelf life.
ICIS pricing quotes ethylene in Europe, Asia-Pacific and the US Gulf.
Frequency:
Published weekly on Fridays and an Ethylene Daily (Asia) report is published Mondays-Fridays.
Real time Price Alert Service (PAS) delivering market news and trends throughout the day.
Ethylene (EUROPE)
Weekly Price Assessments:
Ethylene Contract Prices
- FD NWE monthly (EUR/MT & conversion to US CTS/LB)
Ethylene Spot Prices
- FD NWE PIPELINE (EUR/MT & conversion to US CTS/LB)
- CIF NWE (EUR/MT & conversion to US CTS/LB)
- CIF MED (EUR/MT & conversion to US CTS/LB)
Feedstock – Naphtha Spot Prices
Ethylene (ASIA-PACIFIC)
Daily and Weekly Price Assessments:
Ethylene Daily Spot Prices
- CFR N.E.Asia (USD/MT & conversion to US CTS/LB
- CFR S.E.Asia (USD/MT & conversion to US CTS/LB)
Weekly Price Assessments:
- FOB KOREA (USD/MT & conversion to US CTS/LB)
- CFR N.E.ASIA (USD/MT & conversion to US CTS/LB)
- CFR S.E.ASIA (USD/MT & conversion to US CTS/LB)
- FOB S.E.ASIA (USD/MT & conversion to US CTS/LB)
Feedstock – Naphtha Spot Prices
Ethylene (US GULF)
Weekly Price Assessments:
Ethylene Net Contract Prices (FD):
- Pipeline monthly (US CTS/LB & conversion to USD/MT)
Ethylene Spot Prices (FD)
- Pipeline weekly (US CTS/LB & conversion to USD/MT)
Feedstock – Naphtha Spot Prices
- DEL USG PARAFFINIC (USD/MT)
General Information:
Assessment window:
Price assessments are based on information supplied by market participants through the week up to close of business on Fridays at 1800 hours in London, Singapore and Houston.
Daily assessments are based on information gathered throughout the day up to the close of business at 1730 hours in Singapore.
Specifications:
Price quotes are provided on the basis of product of 99.9% purity. The European FD PIPELINE quote is for ARG specification.
Timing:
In Asia, business is usually concluded within a two-to-six week forward delivery window from the date of publication. In Europe, business is usually concluded within a six week forward delivery window from date of publication. However, given arbitrage movements, a maximum forward delivery window of 60 days applies for the quotations. In the US, contract prices are tied to the delivery month referenced next to the price. US spot prices are quoted for one-to-two weeks out.
Terms:
30-90 days after bill of lading date.
Standard cargo size:
Typical cargo sizes in Asia range from 2,300 to 3,500 tonnes while product from the Middle East typically range from 4,000-6,000 tonnes. Typical European cargo sizes range between 2,000 and 5,000 tonnes. US domestic deliveries are typically sold in 5-10 million lb parcels via pipeline. Imported cargo sizes can be up to 4,000-5,000 tonnes.
Assessment basis:
ICIS pricing ethylene price assessments are based on information gathered throughout the week from producers, traders, end-consumers and the shipping market. The assessment takes into consideration: confirmed deals, reported deals, firm offers and bids, buy and sell indications, and rumoured deals.
All efforts are made to confirm pricing levels with the respective buyer and seller before price assessments are adjusted. In the absence of confirmation and/or trades, price ranges may be adjusted at the discretion of the editor on a notional basis to better reflect levels at which trading activity could take place. Consideration is also given to all factors potentially influencing the price of ethylene at any given time, including supply/demand information; feedstock prices and derivative market prices.
In Europe, contract prices are fixed on a monthly basis. Monthly quotes were first introduced in January 2009. The bi-monthly contract quote was discontinued in Q4 2008.
The contract price is negotiated between independent producers and their consumers from a broad spectrum of derivative sectors and is agreed on a gross basis. This base price will usually be subject to discounts relating to volume size and/or delivery terms, but these discounts are agreed on a private and confidential basis. The contract price is published only when direct confirmation from two different producers and consumers, i.e. “2 + 2”, has been received from the parties concerned.
It is understood that ICIS pricing price assessments are often used as a benchmark for spot/contract ethylene trades, on an ICIS pricing average +/- alpha basis. As a result, special emphasis is given to ensuring that the ICIS pricing average net spot price is a number that can be readily agreed upon by as wide a cross-section of the market as possible. Only outright spot deals, as opposed to swap trades, are taken into account for the weekly assessment.
Netback calculations (i.e CFR prices derived from FOB numbers + freight) are not usually considered sufficient to warrant an automatic adjustment of CFR assessments on the basis of open market freights. The use of COA vessels in Asia-Pacific and the need for employment can lead to below-market freight components to apply. ICIS pricing prefers to adjust assessments on a like-for-like basis, CFR for CFR, FOB for FOB. Similarly southeast Asian price assessments are not adjusted on northeast Asian prices + freight component, or vice versa.
However, in the absence of any CFR N.E./S.E. Asia deals and discussions, the FOB numbers can be used as a gauge of where trading activity might take place at the discretion of the editor.
The Asia-Pacific report focuses on the regional spot market. However information on domestic contract pricing and prevailing formulae is carried in the text, where details are available. Northeast Asia comprises Japan, Korea, Taiwan and China, while southeast Asia comprises the Philippines, Thailand, Malaysia, Singapore and Indonesia.
The Ethylene Daily (Asia) report covers spot deals on a CFR N.E.Asia and CFR S.E.Asia basis. The assessment takes into account deals, bids and offers and price ideas heard throughout the day. It also includes cracker production updates.
In the US, the net contract price usually settles at the end of the month listed. US ethylene spot prices are on a free-delivered (FD) basis and represent confirmed business, bid/offer levels or general sentiment.
2 October 2012