Asian ethylene prices slide on an influx of deep-sea cargoes, propylene holds steady
C2 dragged down for 2nd week, tightness still supports propylene
Spot ethylene prices were on a downward spiral from early March to August, as demand from China, the largest ethylene buyer, slumped due to Covid-19 lockdowns. By mid-August, however, the market turned up on the heels of run rate cuts at regional crackers before recently coming down once again.
“Although regional supply has remained tight on cracker run rate cuts since early 2022, ethylene prices had collapsed due to the dearth of China demand. The sharp price rebound in late August was driven by a surge in end-user buying and short-covering. Traders were caught by the sudden supply squeeze, as they previously anticipated many deep-sea cargo arrivals from September through December,” noted a Western trader.
Meanwhile, propylene prices held steady amid ongoing tight supply in China as several PDH plants remain in extended turnarounds while others have maintained reduced operating rates.
Spot ethylene prices fell $30/ton this week, and were assessed at $910/ton CFR China and at $920/ton CFR Southeast Asia, as of September 27. Spot propylene prices stayed flat, and were assessed at $900/ton CFR China, and at $920/ton CFR Southeast Asia, as of September 27.
Long-haul shipments from the US weigh on ethylene
The Asian ethylene market had a short reprieve from late August to mid-September, following months of price declines. This has now flipped back into further price slippage amid a steady inflow of deep-sea cargo arrivals, as well as waning regional demand.
Traders report more deep-sea, ex-US Gulf cargoes that have been shipped in September, and will also be shipped in October, that are heading into Asia.
A Chinese trader took an 11,500-ton US cargo for late September loading, or November arrival at $920-940/ton CFR China. Another 11,500-ton US cargo was shipped in mid-September by a Chinese PVC producer.
There are also “take or pay” export contracts, where cargoes have to be lifted by traders. “These contracts have to be fulfilled or there will be penalties for not lifting the cargoes. These are export contracts but not necessarily for contract sales into China,” a trader elaborated.
Several traders were weighing the option of shipping some of these ex-US Gulf cargoes to Europe instead of Asia. However, with the arbitrage closing in Europe, it will be challenging to try selling the excess ethylene cargoes there, traders commented. “There are more Chinese buyers with larger spot purchase budgets,” a Western trader added.
For September and October shipments from the US Gulf, traders said there were six vessels fixed for September loading, carrying cargo sizes of 9,000 to 11,500 tons of ethylene. For October shipment, there are six to seven vessels, although not all have been fixed, which will carry 9000 to 15,000 tons of ethylene. Most of these are heading to Asia, traders said.
Long haul ethylene shipments from the US, Europe and the Middle East to Asia for September arrival were also high, estimated at around 87,000 to 90,000 tons, said traders. August arrival volumes were lower, at around 50,000 to 55,000 tons. Of the volumes shipped to Asia for September arrival, some 30,000 to 35,000 tons originated from the Middle East and were destined for India, Pakistan and Indonesia. August arrival shipments from Europe were around 28,000 to 30,000 tons.
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