ICIS Ethylene price reports are covered weekly in Asia, Europe and US and also daily in Asia. Reports include analysis and market intelligence on contract and spot prices, margins, production issues, upstream and downstream news and any other influencing factor that is impacting price movements at that given time. In addition to weekly reports there are also margin reports for each region.
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Updated to Q4 2019
Margins for naphtha-based process turned negative due to weak spot ethylene prices and high feedstock costs. The spot market was pressured by a supply overhang resulting from destocking by producers, prolonged term contract negotiations for 2020 and production cuts at integrated downstream facilities amid weak margins and turnarounds. The start-up of a US export terminal in the second half of December and stock clearance by US and European producers contributed to the supply glut.
China’s import demand contracted due to new domestic capacities. A key buyer halted imports and became a domestic seller since September following the start-up of its cracker. Restocking activity saw some pick-up in December as buyers accumulated inventory ahead of 2020 term contract negotiations and to prepare for the Lunar New Year holidays. In Indonesia, some buyers increased imports on expectations that local supply would fall after the country’s sole producer expands downstream operation.
Planned cracker maintenances were completed by the end of November and a couple of unscheduled outages lingered through the quarter but even so, supply lengthened sufficiently in November and December to warrant cuts in cracker operating rates at most sites. Export opportunities which in previous years were a workable outlet for growing volumes, were severely restricted for pricing reasons but nevertheless, some volume was exported in order to manage balances to Asia in December.
Demand was below expectations moving into the fourth quarter and consumption continued to slow, dropping off more significantly in December because of the usual year-end working capital considerations. Macroeconomic worries and US-China trade tensions continued to weigh on market sentiment, although there was a positive development in the latter.
Production issues in September and October for ExxonMobil, Chevron Phillips Chemical, INEOS, Eastman and others constrained supply temporarily; however, ethylene production finished 2019 on a high note thanks to cracker start-ups and rate increases, particularly Sasol’s. NGL fractionation capacity increases by Enterprise Products and ONEOK and pipeline expansions cheapened feedstock ethane, decreasing ethylene cash costs and enabling inventories to build. Typical year-end de-stocking mitigated supply growth to a limited extent.
Demand was healthy in the fourth quarter of 2019, though not enough to outpace surging supply. Derivative demand continued to be weakened by US-China trade tensions and a relatively bearish macroeconomic picture, with particular sensitivity to the construction, packaging and household supplies industries. Despite this, polyethylene (PE) plant start-ups by Formosa and LyondellBasell and rate increases during the quarter buoyed demand as PE margins rebounded from a September/October dip caused by a spike in ethylene prices.
We offer the following regional Ethylene analysis and news coverage to keep you informed of factors and developments affecting prices in the Ethylene marketplace.
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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 part 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 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 anexplosion hazard..
Ethylene Asia Margin Report Methodology
This document is intended to provide methodology support for customers receiving the ICIS Weekly Margin – Ethylene Asia report.
Ethylene China Margin Report Methodology
This document is intended to provide methodology support for customers receiving the ICIS Weekly Margin – Ethylene China report.
Ethylene Europe Margin Report Methodology
This document is intended to provide methodology support for customers receiving the ICIS Weekly Margin –Ethylene Europe report.
Ethylene US Margin Report Methodology
The main method of ethylene manufacture is by the thermal cracking of hydrocarbons. Both gaseous and liquid hydrocarbon feedstocks are used in the US, so this report examines two typical models.
Ethylene is a colourless, odourless, extremely flammable compressed gas with a faintly pleasant odour. It is slightly soluble in water and soluble in liquid hydrocarbons. It reacts with strong oxidants causing fire and explosion hazard.
Ethylene is mainly used to make polyethylene (PE). Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) mainly go into film applications such as food and non-food packaging, shrink and stretch film, and non-packaging uses. High density polyethylene (HDPE) is used primarily in blow moulding and injection moulding applications such as containers, drums, household goods, caps and pallets. HDPE can also be extruded into pipes for water, gas and irrigation, and film for refuse sacks, carrier bags and industrial lining.
Other major uses are ethylene oxide (EO), ethylene glycol (EG), vinyl chloride monomer (VCM) for polyvinyl chloride (PVC) and styrene.
Other derivatives include linear alpha olefins (LAO), detergent alcohols and plasticiser alcohols, vinyl acetate monomer (VAM), and various intermediates such as ethyl acetate and ethyl acrylate.
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. The cracking of ethane and propane is primarily carried out in the US, Canada and the Middle East.