Asian ethylene hit 14-months low; SEA market breached below the $1000/ton mark

TheAsian ethylene market has been constantly following the downtrend since late August 2018 in spite of the heavy maintenance shutdown schedule at major crackers across the region. Ethylene cost based on CFR Southeast Asia breached below the $1000/ton threshold on 22 October 2018, to $980/ton – the lowest level in more than 14 months. 

As reported earlier, one of the main reasons driving such a steep reduction is the sluggish demand from the downstream PE market, which has been suffering from negative margin due to stiff competition. This has led to excess ethylene supply at some integrated plant that ultimately ends up in the spot market.

“Demand for ethylene from the downstream PE sector might not see any drastic improvement in the near term despite the positive theoretical margin at the current costs. We believe that room for further reduction is there, but not too large,” a market participant said.

Ethylene supply might become more comfortable in the near term in-line with the restart at some operators in Asia. This includes the ExxonMobil Singapore 900,000 tons/year ethylene cracker.