Recently, there has been a noticeable difference in global ethylene prices. On the one hand, ethylene prices in the Atlantic Basin are under increasing downward pressure due to the dramatic increase in U.S. production capacity; on the other hand, due to the unplanned shutdown of plants and robust Demand, ethylene prices in the Asia Pacific region have performed strongly. The reason for this is that there is only one US channel in Houston, and the 365,000-ton/year ethylene export terminal is in operation, which is not enough to transport all the surplus ethylene in the US to the supply shortage. Asia, and rebalance the global market.
U.S. price innovation is low
Affected by abundant supply, the spot price of ethylene in the United States fell sharply, resulting in the US ethane cracker profit margins hovering near 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 19th, US ethane cracker profit margin rebounded slightly to 7.14 cents/lb (US$157/tonne). As large supplies continue to push down prices, the US ethylene spot transaction price was 14 cents/ April 19th. Pound ($308/ton).
Under the impetus of the shale gas boom in North America, the US ethylene production capacity 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 Mexichem and Western Chemicals. Occidental Chemicals joint ventures Ingleside, Dow DuPont and Chevron Phillips Chemicals opened a new cracker in Texas. It expects another 4 million tons/year of new ethylene capacity to be put into production in 2018. In 2019 and beyond, there will be more new ethylene production capacity 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 4900 in 2026. Ten thousand tons.
European market pressure
During the rest of the year, European ethylene producers will usher in a turbulent period, expecting spiraling profit margins for crackers.
Since the sharp decline in international oil prices in mid-2014, European ethylene producers have enjoyed a good profit margin. However, with the continuous 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 expected increase in new ethylene capacity in the United States is putting pressure on European ethylene producers, and the European cracker profit margin will drop significantly.'
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 export of ethylene from the United States 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. European ethylene and polyethylene inventory levels have been improving. , Which brings downward pressure on spot prices.
Asian market is more stable
Affected by the influx of European goods, the current Asian ethylene market has also been under certain pressure. On April 20th, the price of ethylene fell by US$20/ton from the previous day to US$1,340/tonne (CFR, Northeast Asia). However, Asia The performance of the ethylene market is still stronger than that of Europe or the United States. It is mainly supported by three factors: First, demand is still relatively stable; Second, steam crackers in Asia are in the shutdown period; Third, the current Asian styrene monomer production has a strong profitability.
In 2018, seven of Japan's 12 steam crackers will be shut down for maintenance, accounting for 53% of Japan's total ethylene production capacity. Customs data show that in February Japan's ethylene exports fell 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, but due to Asian steam cracker is in the work stoppage maintenance season, supply from Europe has not caused too much of the market.'
The spot ethylene demand in the Asian market is also healthy and stable, especially in China, which is mainly driven by the strong profitability of styrene production. According to Platts data, the current Asian styrene production profit is 130~150 USD/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 the supply of ocean-going cargoes. However, under the support of steady demand, Asian ethylene prices are unlikely to fall sharply.