Asia ethylene prices at near 17-month low amid supply glut

Focus article by Yeow Pei Lin

SINGAPORE (ICIS)–Spot ethylene import prices in northeast Asia slumped to a near 17-month low in the week ended 9 June amid concerns that the prevailing supply glut may spill over to July.

Discussions were at a $900-950/tonne CFR (cost and freight) NE (northeast) Asia range for end-June to July-arrival cargoes, down from $960-970/tonne CFR NE Asia in the previous week ended 2 June.

There are still sellers looking for outlets for end-June to early-July delivery cargoes despite a flurry of deals for such relatively prompt tonnes in the previous week.

It is increasingly difficult to place these cargoes as a number of major importers in China and Taiwan have ample stock in June and the first half of July.

This is due to the arrival of more than 60,000 tonnes of cargoes from Europe and the Americas during end-June to mid July, with the bulk of supply heading to Taiwan, as well as strong exports from Asian producers in the past several weeks.

A southeast Asian producer offered via tender 7,000 tonnes of spot ethylene for end-June loading during the week, possibly due to cutbacks in its downstream polyethylene (PE) operations.

“Just when we thought prices may be bottoming out, more new supply emerges,” a trader said.

The diplomatic crisis in Qatar added another layer of uncertainty to the market.

A major Saudi producer may divert cargoes that it used to export to Qatar to markets in Asia as a consequence of the rift between Doha and major Gulf Cooperation Council (GCC) members led by Saudi Arabia.

Meanwhile, exports from Korea Petrochemical Industry Co (KPIC) are on track to begin in July following the completion of its cracker expansion.

The company restarted its Onsan cracker on Thursday night and on-spec production is expected by the end of Friday. The producer is set to become a regular exporter after it raised its ethylene nameplate capacity by 330,000 tonnes/year to 800,000 tonnes/year.

“July is not looking good. We think there is more room for prices to fall,” a Chinese buyer said.