The price spread between CFR Northeast Asia and CFR Southeast Asia ethylene markers remained at a record high $140/mt Monday, flat from Friday, amid strong demand in China from styrene monomer producers, S&P Global Platts data showed.
The location spread has never breached the $140/mt mark since Platts started tracking the spread, with it last assessed at the same level on January 14, 2011, Platts data showed.
The CFR Northeast Asia ethylene marker has firmed over the past two weeks, supported by strong demand from SM producers in China, who were purchasing spot ethylene cargoes at around $1,050-1,070/mt CFR NEA last week.
On Monday, the CFR NEA ethylene marker was assessed unchanged from Friday at $1,040/mt, which means the SM production margin was still firmly positive at plus $133/mt Monday, according to Platts data.
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In Southeast Asia, on the other hand, the marker was assessed unchanged from Friday at $900/mt Monday. Sentiment in the region was bearish amid ample deepsea supplies from the Middle East, sources said.
Rising freight rates made it difficult for traders to move spot ethylene cargoes from Southeast Asia to Northeast Asia, where there was supply tightness, sources added.
A trading source said the freight rate between Southeast Asia and Northeast Asia was more than $100/mt currently, compared to $50-$60/mt previously.
The location spread between NEA and SEA markers is unlikely widen further in the short-term, as other ethylene derivative producers, such as polyethylene makers, have been suffering from losses at current ethylene feedstock prices.
Platts data Monday showed that the price spread between PE and ethylene was at plus $70/mt, lower than a typical breakeven spread of $150/mt.
