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North- America-
Ethylene prices have experienced a mixed sentiment across the US market during the fourth quarter of 2023. During the initial of Q4 2023, Ethylene prices increased significantly due to limited material availability in the domestic market. The cost support from feedstock Ethane was sufficient as its prices settled on the higher side in the domestic market. In addition, demand for Ethylene from the downstream Ethylene oxide and Polyethylene industry has improved, which led to the bullish market sentiments of Ethylene among manufacturers.
However, during November and December, Ethylene prices have inched lower in the domestic market. The feedstock Ethane prices have decreased amid weak demand from other industries which in turn led to the low production cost of Ethylene. In addition, demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained subdued amid the off-seasonal dullness along with macro-economic headwinds including high inflationary pressure and rising interest rates, leading the bearish market sentiments of Ethylene among the manufacturers. In addition, spot market transactions were also average as the enthusiasm of terminal firms to enter the market was not strong.
In the meantime, demand from international markets including Asia and European markets has subdued in recent weeks as macroeconomic challenges continue to keep consumer spending at bay. US Ethylene producers faced difficulties in raising export prices as buyers found it difficult to stomach. On the supply side, the material availability was plentiful to cater to overall downstream demand which further weighed down the prices of Ethylene. Therefore, prices of Ethylene FOB US Gulf were settled at USD 421/MT during December 2023.
Asia- Pacific-
Ethylene prices displayed varied sentiments in the Asian market throughout the final quarter of 2023. In the early stages of Q4, Ethylene prices saw an uptick in the Japanese market, driven by cost pressures from elevated feedstock Naphtha prices in the domestic market. This resulted in a bullish outlook among Ethylene manufacturers. Additionally, demand from the domestic Polyethylene industry remained moderate during this period.
However, towards the end of Q4, Ethylene prices experienced a decline in the Japanese domestic market. The demand from both the Polyethylene and Ethylene oxide industries remained sluggish due to macro-economic challenges and low seasonality. Spot market transactions were also average. The economic downturn in China, the world's second-largest economy, had a ripple effect on countries dependent on trade with Beijing for growth, including the Japanese Ethylene industry. This impact was not geopolitical but rather a consequence of the economic slowdown. Weak global demand subdued domestic activity, and concerns in China's property sector contributed to the downturn in the Japanese Ethylene industry. According to the Ministry of Finance, Japanese exports dropped 0.2% YoY to JPY 8,819.59 billion, marking the first decline in three months, mainly influenced by weak demand from China.
Furthermore, the decrease in feedstock Naphtha prices led to a reduction in the production cost of Ethylene in the Japanese domestic market. Additionally, Japan's manufacturing activity declined in November, reflecting the fragility of the economy amid weak demand and inflation. High material availability on the supply side added pressure on manufacturers to clear inventories at lower prices. Consequently, Ethylene prices FOB Tokyo was settled at USD 853/MT in December 2023.
Europe-
Ethylene prices have showcased mixed bags in the European market during the fourth quarter of 2023. During October 2023, Ethylene prices significantly increased in the German market due to inadequate material availability in the domestic market. The demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained active which supported the prices to follow an upward trend in the domestic market. Meanwhile, imports from the Asian market have turned costly as freight charges have increased which in turn led to high imported prices of Ethylene in the domestic market.
However, during November and December 2023, Ethylene prices have gained a downward trend in the domestic market. The demand for Ethylene from the downstream Polyethylene and Ethylene oxide industry has remained lukewarm due to macroeconomic headwinds including persistent inflationary pressure and high interest rates coupled with low seasonality which weighed down the prices of Ethylene across the domestic market. Furthermore, BASF mapped out further cost cuts and scaled back investment spending; earnings and sales were at the lower end of its target ranges due to an uncertain global outlook.
In addition, cost pressure from feedstock Naphtha was limited on the Ethylene as its prices settled on the lower end in the given time frame. Also, the German manufacturing purchasing manager index remained in the contraction zone (i.e., below 50) indicating a deterioration in industrial and production activity. Furthermore, amid the destocking season, manufacturers have cleared out their inventories at low prices. As a result, prices of Ethylene FD Hamburg were settled at USD 730/MT during December 2023.
Get Real Time Prices Of Ethylene Prices:- https://www.chemanalyst.com/Pricing-data/ethylene-40
Middle East-
Throughout the final quarter of 2023, the Saudi Arabian Ethylene market experienced fluctuations in prices. In the early part of Q4, domestic Ethylene prices saw an upward trajectory, primarily influenced by increased Naphtha prices, a key feedstock, and robust crude oil prices, elevating the production cost of Ethylene domestically. The heightened demand from both domestic and international markets, particularly from the Polyethylene and Ethylene oxide industries, prompted manufacturers to raise their pricing.
However, towards the end of Q4, there was an unexpected decline in Ethylene prices within the domestic market. This was attributed to subdued demand in the midst of off-season sluggishness and a tepid global economy. Ethylene demand from both domestic and international markets was lackluster, leading to weak inquiries from the downstream Polyethylene industry. Slow consumption in the end-user sector contributed to bearish market sentiments among Ethylene manufacturers.
Additionally, a decrease in feedstock Naphtha prices, coupled with low crude oil prices, resulted in a reduction in the production cost of Ethylene in the domestic market. Despite turmoil in the Red Sea, upstream Crude oil prices dropped due to weak demand and ample storage, further easing the overall manufacturing cost of Ethylene domestically.
Looking ahead, the prevailing bearish sentiment is expected to persist into the new year due to tepid demand. Buyers are exercising caution, awaiting more clarity amid the ongoing war, and growing economic challenges. Consequently, Ethylene prices FOB Al Jubail was settled at USD 867/MT in December 2023.
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