The spread between Northeast Asia and Southeast Asia ethylene prices widened $30/mt day on day to hit a record high of plus $175/mt Wednesday, S&P Global Platts data showed.
On Wednesday, the CFR Northeast Asia ethylene price marker rose $30/mt day on day to be assessed at $1,270/mt, the highest level since July 7, 2015, when the price was assessed at $1,280/mt, while the CFR Southeast Asia price marker was assessed unchanged at $1,095/mt over the same period.
Spot ethylene demand in Northeast Asia was strong this week as Chinese end-users resumed trading activities after the Lunar New Year holidays, market sources said.
This week, a spot transaction was heard in the range of $1,270-$1,280/mt CFR Northeast Asia, compared to $1,230-$1,240/mt CFR Northeast Asia in the previous week.
Chinese end-users are particularly active in seeking spot ethylene cargoes currently, in a bid to cover their ethylene shortage amid the steam cracker turnaround season. In addition, positive ethylene derivatives margins helped to keep spot ethylene demand firm.
According to Platts data, the CFR China styrene monomer price hit $1,574/mt on February 3, the highest level since August 25, 2014, when the price was assessed at $1,576.50/mt. On Wednesday, the CFR China SM price fell $16/mt day on day to be assessed at $1,473/mt, but the Asian SM production margin remained positive at plus $102/mt, Platts data showed.
“Chinese styrene monomer producers can afford to pay $1,300/mt CFR for a spot ethylene cargo,” said a market source this week.
Market sources said the ethylene location spread between Northeast Asia and Southeast Asia would probably remain wide, as the CFR Northeast Asia ethylene price would likely hold firm.
Spot ethylene cargoes in Northeast Asia would likely remain tight, with South Korean producers still reluctant to reduce their downstream polyethylene production despite negative PE margins.
On Wednesday, the price spread between PE and ethylene was calculated at minus $85/mt compared to minus $55/mt the day before and a typical breakeven spread of plus $150/mt. Wednesday’s spread level is the lowest since June 29, 2015, when the spread was calculated at minus $100/mt.
“Some steam crackers in South Korea are due to be shut down March and April for an annual maintenance. It seems it is difficult to adjust their plant operations prior to the turnaround season,” said another market source.
In March, SK Global Chemical plans to shut its 200,000 mt/year steam cracker in Ulsan for annual maintenance, while South Korea’s Korea Petrochemical Industry Co., or KPIC, will shut its 470,000 mt/year steam cracker in Onsan in April.
