Spot ethylene costs climb on global supply constraints
Global supply constraints boosted spot prices for ethylene across the globe over the course of the past week, as per the pricing service of ChemOrbis. Firmer energy and naphtha prices week over week helped ethylene prices to post increases in Europe, Asia and the US in the period. Looking at the upstream chain first, crude oil futures on the NYMEX rose by $2/barrel week over week to remain above the $95/barrel threshold. ICE Brent crude futures for March delivery cargoes gained more than $1/barrel in the period.
Spot naphtha prices followed a steady or firmer trend on a weekly basis in different regions, whereas the recent values stayed below early January levels. Spot naphtha costs in Asia were unchanged on CFR Japan basis week over week indicating a $10/ton loss from the start of January. In Europe, spot naphtha costs soared $30/ton on CIF NWE basis last week but still represented a $30/ton drop from early this month.
In Europe, spot ethylene prices gained €10/ton on FD NWE basis over past week while they indicated a larger increase of €95/ton with respect to the beginning of January, as per ChemOrbis. The main driver behind the firming continued to be the ongoing outage at Naphtachimie’s Lavera cracker in France. A joint venture between Ineos and Total Petrochemical, the cracker has been offline since late December last year due to a compressor problem amidst various speculations regarding the restart date among market players. Some players comment that the exact restart date of the 745,000 tons/year cracker is uncertain, while some of them don’t expect the company to resume operations before late February, said European market sources.
At the same time, Dow Chemical reportedly restarted its cracker in Tarragona, Spain after shutting it in November last year given an outage. However, it may take some time to resume full operations at the 670,000 tons/year cracker amidst lackluster demand from downstream markets, according to some market sources. In Asia, ethylene supplies were said to be restricted mainly due to the absence of Middle Eastern cargoes recently. Plus, higher prices in Europe opened an arbitrage window from Asia to that region and caused supply to tighten further amidst sellers’ interest to sell their cargoes to Europe instead. Spot ethylene costs soared $55/ton on CFR Northeast Asia basis on the week, bringing the total increase amount to $110/ton with respect to early January.
Similarly, supply issues in Texas pushed spot ethylene values up in the US with prices rising 1.75 cents/lb ($39/ton) on FD USG basis when compared to the previous week. The latest figures at the end of last week stood 6.75 cents/lb ($149/ton) above early January levels. Among the ongoing maintenances, Dow Chemical reportedly plans to keep their 600,000 tons/year cracker in Freeport, Texas offline until January 25. Additionally, a joint venture cracker between BASF and Total Petrochemicals may reportedly remain offline for up to three weeks given a maintenance at the 885,000 tons/year facility.