Asian ethylene market rebounded strongly on improved demand from China

The Asian ethylene market has been enduring a steep rebound over the past week thanks to healthy demand from the Chinese buyers. Data from CommoPlast showed that compared to mid-May 2018, ethylene costs based on CFR Northeast Asia has surged $90/ton to $1340/ton, while Southeast Asian market gain $60/ton in the same period to $1220/ton.

Demand for ethylene heated up due to healthy downstream market in China, sources said, especially from the styrene monomer sector. Buyers seem to be stocking up for June, fearing that supply might tighten in the near term amid several cracker shutdowns.

Besides the major shutdowns at Japanese operators – Mitsubishi, Keiyo Ethylene and Mitsui Chemical, Taiwanese major - Formosa Petrochemical Corp will also take its number 1 cracker off-stream for 42 days by the beginning of June. 

However, market sources believed that the current trend might soon lose momentum, as downstream PE market remains weak and most of the import PE cargoes to China are now traded below the ethylene costs.

“The rapid price hike has attracted spot cargoes from Southeast Asia, Middle East and Europe, which might soon ease the concern over the near-term supply outlook. Besides, crude oil plunged from multi-year high levels, from which buyers decided to slow down purchasing activities for clearer direction before making next move,” a market source informed.