Asian ethylene market falls under distress as supply anchored price recovery

The Asian ethylene market is having a tough time recovering from the recent fall, as supply remains lengthy in the region, sources said. The steep plunge took place during late August that sent Northeast Asia prices from $1400/to to $920/ton by the beginning of November that heavily pressure most of the downstream markets. 

The brief rebound is rather short-lived. In the past five trading days, the market has shredded all of the gains recorded during late November and send prices to the multi-year low levels. Northeast Asian value breached below the $900/ton mark for the first time since mid of February 2016 while Southeast Asia has not seen prices below $800/ton since September 2015.            

“Supply is rather heavy,” a market source said, quoting the tender offering from PTT Thailand for the second half of December loading for 3,500-5,000 tons. 

Other market players expressed a rather bearish outlook for ethylene market in the near-term claiming that both buyers and sellers are having the same objective on the inventories at the end of the year – both want to maintain low stock levels.

The ethylene market might receive some support from the downstream sectors, including PE and styrene monomers, which have been firm this week. The question is would this be sustainable. 

This week, SM based on FOB South Korea jumped $65/ton from last Friday to $1004/ton. “Don’t be too excited. Local supply in China is ample and that might weigh down on prices real soon,” a Chinese producer cautions the market.

In the meantime, transactions for import HDPE film to China improved visibly at the beginning of the week, however, unable to create any major boost for prices. “Overseas suppliers claimed sold out allocation or having limited availability, however, buyers are rather cautious. We have not seen a clear direction for the trade talks between China and the USA, therefore, the risks are still high,” a buyer added.