Asian ethylene prices shrug off crude rally
According to the weekly average data from ChemOrbis Price Wizard, spot ethylene costs dropped by $45/ton on CFR Far East Asia basis during the last two weeks. On the other hand, WTI crude oil futures on NYMEX and Brent crude are still hovering at the highest levels of 3 years, the data revealed.
Some non-integrated PE producers across Asia either lowered their operating rates or halted production citing their melting margins, which has been blamed as the main trigger behind reduced buying appetite towards ethylene. Prior to the recent losses in ethylene prices, the market reached their highest levels since June 2015 owing to a relentless rally in the past two and a half months.
The recent fall in ethylene has also defied the bullish trend in the downstream PE market, which hit multi-year highs in January, particularly for HDPE film amidst tightness and healthy demand ahead of New Year Holidays. Now, spot ethylene costs have come on a par with China’s import HDPE film market following the recent losses in prices, according to the weekly average data from ChemOrbis Price Wizard.
Some players also pointed to the nearing turnaround season for styrene, saying that the planned shutdowns may also reduce ethylene consumption further at the time.
Although some traders across Asia are worried about improved supplies and reduced buying appetite for ethylene, there are also others who argue that the market may rebound for March business considering the planned shutdowns at some steam crackers and delayed restarts. The constant strength of the energy complex may also prop ethylene prices up, they say.
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