According to SSESSMENTS.COM pricing database, ethylene prices in Asia fell to its new record-low on Tuesday dragged by an oversupply and a collapse in crude oil futures amid the coronavirus pandemic. As of April 21, ethylene prices have fallen to $328-334/ton on CFR NEA basis, a reduction of $150/ton from April 1 and by $504-506/ton from this year’s peak of $832-840/ton seen at the end of January. Some market participants even heard about available prices at $200/ton-level on both CFR NEA and SEA basis, although it is not confirmed yet.
As SSESSMENTS.COM noted, oversupply becomes the primary driver in ethylene prices slump in Asia. The prices of physical naphtha cargoes fell to $192.50/ton CFR Japan late on Tuesday following the recent crash in oil prices. The low naphtha prices keep ethylene margins positive, with the naphtha-ethylene spread standing at $132.50/ton. As a result, cracker operators in Northeast Asia maintain production rates at 90%-95%. The regional market also receives a steady supply of deep-sea cargoes from the US and Europe.
However, ethylene producers are facing mounting inventory pressure as demand from downstream sectors dwindles due to the pandemic. Market participants told SSESSMENTS.COM that polypropylene (PP) fibre grade demand had seen massive improvement from Chinese mask producers. However, it seems unable to compensate for the declining demand from other ethylene downstream sectors such as polyethylene (PE), monoethylene glycol (MEG), polyvinyl chloride (PVC), and styrene monomer (SM).
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