Ethylene Semi-Annual Report Part 1: H1 Price Declined after A Rise
In H1, 2023, China’s ethylene market price increased first and then trended down, mainly affected by the demand and overseas ethylene prices. With the ethylene price falling to a low level in July and some downstream units restarted after maintenance, inquiring and buying intentions improved, so the price started to increase. However, weak prices of downstream products curbed the increment. In H2, supported by the cost and resilience of downstream product prices, it’s estimated that the ethylene price may fluctuate upwards from August to September but trend down from November to December.
In H1, 2023, China’s ethylene market price trended up first and then dropped, which was aligned with the forecast in 2022-2023 SCI China Ethylene Market Report. From January to June, China’s ethylene price (ex-works price at Sinopec Sales East China Branch, self-delivery, tax included) averaged RMB 6,873/mt, down 18.54% Y-O-Y. On June 30, China’s ethylene price was RMB 6,000/mt, down 14.3% from early 2023.
In Q1, the demand was favorable and the ethylene price was at a low level before the holiday, so some styrene and EO enterprises replenished their stocks moderately, pushing up the price. In Q2, as the demand recovery was under expectation and some downstream units took overhauls, the demand for ethylene declined notably. In addition, overseas ethylene prices trended down, so the ethylene price started to fall in April. The highest price was RMB 7,500/mt on March 8 and the lowest one was RMB 6,000/mt on June 16, with a price spread of RMB 1,500/mt.
H1, 2023 Ethylene Price Driver Analysis
Demand: In January, the ethylene price kept falling, and the demand was expected to recover after the Spring Festival, so buying appetites of downstream users improved. After the holiday, the trading atmosphere improved and overseas crackers started to take overhauls, pushing up the ethylene prices in the overseas market and domestic market at the same time. The price hit a yearly high of MRB 7,500/mt. Later, due to the weak demand for downstream products and the pessimistic macro outlook on the overseas market, the ethylene demand started to fall.
From January to June, China’s ethylene demand reached 22,500kt, up 12.3% Y-O-Y, mainly due to the commissioning of newly added downstream units. The M-O-M decline was mainly caused by operating rate reduction or shutdown of downstream units.
The total import volume of ethylene was 120kt, up 3% Y-O-Y, mainly due to the maintenance of overseas crackers. From May to June, with the overseas ethylene price falling continuously, some offers were even lower than $700/mt, reducing export arbitrage opportunities.
Profit: From January to June, profits from producing some products improved while most were negative. Although the profits from producing EVA, EPDM and VAC remained positive, while they showed a notable downtrend in 2023.
……
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
