Ethylene carries premium over propylene in Asia, trades at discounts in US
Players attributed much of this gap to the feedslate difference between Asian crackers, which are predominantly naphtha-based, and American crackers, which generally use ethane feedstock. Ethylene production costs are higher for naphtha crackers relative to ethane crackers, putting upward pressure on Asian ethylene prices, while ethane based crackers feature lower propylene coproduct ratios relative to naphtha crackers, a contributing factor pushing up propylene prices in the US.
In Asia, spot ethylene prices on a CFR Far East Asia basis have been carrying a consistent premium over propylene prices on an FOB Korea basis since the start of 2013. The size of this premium has reached record heights over the past year, with the premium remaining above $400/ton for much of the past year while hitting an all-time record of around $550/ton in March. The premium presently sits above the $450/ton threshold.
In the US, meanwhile, spot ethylene prices on an FD USG basis have been trading with a discount relative to propylene prices for the past few years. The premium carried by spot propylene prices over ethylene had risen to as high as $220/ton earlier in 2016 before narrowing to around $100/ton in the past few weeks.
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