As SSESSMENTS.COM noted, ethylene prices fall as Asia market responded negatively to high price. Ethylene prices in Asia market kept the uptrend after breaking a threshold level last month before falling sharply on the week commencing July 6. On July 8, ethylene price on CFR Northeast Asia basis captured at $798-804/ton, dropped between $79-81/ton from level captured on July 1. Likewise, ethylene price in Southeast Asia dipped between $39-41/ton also compared to the level captured on July 1, stood at $748-754/ton on CFR Southeast Asia basis on July 8.
SSESSMENTS.COM observes several factors are pushing down ethylene price in the Northeast Asia region. Firstly, buyers’ resistance after ethylene price broke $800/ton-threshold level on May 11. While prices hold on their level across May, buyers’ wish for a lower price has been answered in July. It can happen following the second factor as the report says that more ethylene supply expected to arrive in August from the US and Europe. Overall US ethylene demand is expected to remain weak for the remaining of 2020, therefore, producers from these regions will try to push cargoes to the Asia market. Thirdly, declining demand from downstream ethylene derivatives, mainly SM and MEG which impacted out-take for ethylene. For MEG, market sources told that inventory in China is approximately at 1.4 million tons while the digestion rate in China domestic market remains slow. While ethylene price declined, naptha price captured firmer this week. Compared to July 1 level, naphtha price increased by $12/ton, stood at $395/ton on CFR Japan basis on July 8.
SSESSMENTS.COM pointed out that ethylene prices will have difficulty recovering the high level they reached in the previous week with availability of ethylene is getting ampler as the majority of plants in China and Japan are in the process of restarting production after turnaround maintenances. Tianjin United Chemical’s cracker was brought on stream in early-July 2020. Previously, the cracker with an ethylene production capacity of 240,000 tons/year and propylene capacity of 100,000 tons/year was under maintenance since May 8, 2020. Likewise, CPC Corporation had restarted its no.4 naphtha cracker located in Linyuan, Taiwan, following an outage. The unit was shut down on July 2 due to technical issues and restarted on July 6. It can produce up to 380,000 tons/year of ethylene and 193,000 tons/year of propylene.
