Asia ethylene market might be near cyclical bottom after large drop

The Asian ethylene market has fallen $70-75/ton over the span of just one week on the back of ample spot supply while demand from most derivative market is rather sluggish. However, the market started posing early sign of stabilization following the steep reduction, though the upside is not yet clear.

In fact, industry sources informed that Middle Eastern cargoes that were available late last week have now been diverted to Europe, where tight supply is driving the market. 

Inventories within the Asia region might continue to curtail in the coming days, as major shutdowns in South Korea and Japan are wiping out more than 350,000 tons of output from the market this quarter.  

“The ethylene prices might soon find its way back to the up cycle if spot cargoes from overseas suppliers find homes elsewhere. We hope demand would pick up soon ahead of the manufacturing season,” a regional trader said.

While there has been plenty of optimism, one concern that market players are watching out is that Chinese government might conduct safety inspections among petrochemical plants in the country following a series of fire and explosion occurred over the past couple of weeks. “This could potentially slow down the demand to a certain extent,” a Chinese source added.