Recently, there has been a clear difference in global ethylene prices. On the one hand, ethylene prices in the Atlantic Basin (United States and Europe) are facing increasing downward pressure due to the dramatic increase in U.S. production capacity; on the other hand, ethylene prices in the Asia Pacific region due to unplanned shutdown of plants and steady demand Strong performance. The reason for this phenomenon is that the United States has only one ethylene export terminal with a capacity of 365,000 tons/year in the Houston Channel, which is not enough to transport all the surplus ethylene in the United States to the Asian region that is in short supply and to rebalance the global market.
Affected by ample supply, the spot price of ethylene in the United States fell sharply, causing the US ethane cracker profit margins to hover around long-term lows.
On April 9, the profit rate of the US ethane cracker was only 6.81 cents/lb ($150/ton), which was the lowest since Standard & Poor's global Platts Energy Consulting began releasing cracker profit margins in January 2011. Level. On April 19, the US ethane cracker profit margin rebounded slightly to 7.14 cents/lb ($157/ton). As large supplies continued to push down prices, the US spot price for ethylene on April 19 was 14 cents/lb ($308/ton).
Under the impetus of the shale gas boom in North America, the ethylene production capacity of the United States is expected to increase by more than 35% by 2019. In 2017, the US added more than 3.5 million tons of ethylene per year, including Ingleside, Dow, and Chevron Phillips Chemicals, a joint venture between Mexichem and Occidental Chemicals. A new cracker opened in Texas. It is estimated that in the United States in 2018, 4 million tons/year of additional ethylene capacity will be put into operation. In the 2019 and beyond, more new ethylene capacity will be put into operation in the United States. According to estimates by Standard & Poor's Global Platts Energy Consulting, North American ethylene production is expected to climb from approximately 33.7 million tons in 2017 to nearly 49 million tons in 2026.
In the rest of the year, European ethylene producers will usher in turmoil and expect spiraling profit margins for crackers.
Since the sharp drop in international oil prices in mid-2014, European ethylene producers have enjoyed a good profit margin. However, with the successive production of new production capacity in various parts of the world (especially the United States), the situation will change. A European ethylene producer said: "The anticipated increase in new ethylene capacity in the United States is putting pressure on European ethylene producers, and the European cracker profit rate will drop substantially."
A trader stated that the current low profitability of ethylene production in the United States and the strong profitability of ethylene production in Europe are unsustainable. With the United States ethylene exports to Europe, the European market will face greater downward pressure on prices.
Market participants said that in the face of growing imports from the United States, European producers are ready to compete for market share. At present, the operating rate of European crackers is still at a high level. The European ethylene and polyethylene inventory levels have been increasing, which has brought downward pressure on spot prices.
Affected by the influx of European goods, the current Asian ethylene market is also under pressure. On April 20th, ethylene prices fell by US$20/ton from the previous day to US$1,340/tonne (CFR, Northeast Asia). However, the performance of the Asian ethylene market is still stronger than that of Europe or the United States. It is mainly supported by three factors: First, the demand is still relatively stable; Second, the Asian steam cracker is in the shutdown maintenance season; Third, the current production of styrene monomer in Asia is profitable. Strong.
In 2018, 7 sets of 12 sets of steam crackers in Japan will undergo shutdown maintenance, accounting for 53% of Japan's total ethylene production capacity. Customs data show that in February Japan's ethylene exports fell by 29% year-on-year to 39,902 tons.
Asian market sources said: “The influx of ethylene cargo in Europe is a considerable negative factor for the Asian market. However, due to the Asian steam cracker being in the downtime, the supply from Europe has not caused too much of the market.”
The spot ethylene demand in the Asian market is also healthy and steady, especially in China, which is mainly driven by the strong profitability of styrene production. Platts data shows that the current Asian styrene production profit is 130~150 US dollars/ton, which is relatively strong.
Judging from several factors, it is unlikely that ethylene prices in Asia will continue to rise due to the increase in ocean freight supply. However, under the strong support of demand, ethylene prices in Asia are unlikely to fall sharply.