Ethylene price gap widen between Southeast and Northeast Asia

Over the past two weeks, ethylene prices to Southeast and Northeast Asia have been following opposite direction, widening the price gap between the two markets, due to the diverged demand condition.

It is reported that ethylene supply in Southeast Asia is rather comfortable with Shell Singapore restored regular operation rate at its troubled naphtha cracker; demand from most downstream derivatives, however remain sluggish, especially for PE. There is a real mixed situation observed in the downstream PE market in recent days, yet one widely observed detail is that buyers are resisting the current offers, claiming weak end product businesses.

Meanwhile, ethylene cost based on CFR Northeast Asia surged $60/ton since mid-November touching $1040/ton on Friday. Industry experts believed that ethylene prices in the region might continue to inch higher in the near term with main support source comes from the styrene monomer sector.    

Currently, ethylene price in Northeast Asia is about $140/ton higher than in Southeast Asia market, creating an arbitrage opportunity for suppliers. This arbitrage window might widen again if buying interest in Northeast region hold healthy in the coming days.