Asia Ethylene Prices Break Above $1,100 as Crude Surges and Supply Tightens

Asian ethylene prices extended their gains for a fourth consecutive week across Northeast and Southeast Asia, supported by tight regional supply and sharp increases in crude oil and Asian naphtha prices. Despite higher ethylene values, Asian producers have continued operating naphtha crackers at reduced rates amid concerns over possible disruptions to naphtha feedstock supplies.

November Brent futures climbed sharply following renewed fighting between the US and Iran, with crude settling above $95/bbl on September 2 as the market priced in the possibility of further supply disruptions from the Middle East.

With spot availability remaining limited, buyers raised bids to secure increasingly scarce cargoes. The shortage restricted deal activity across both fixed-price and formula-linked transactions. A Western trader said spot availability is unlikely to improve soon as producers remain reluctant to increase cracker operating rates amid heightened Middle East tensions. Cargoes from the US Gulf that were expected to arrive in October and ease the shortage have instead been delayed until November, with shipments destined for China and South Korea.

Ethylene Price Snapshot

CFR China

Price: $1,130/ton

Change: ▲ $80/ton

Bid Range: $1,100–1,120/ton

Offer Range: $1,160–1,200/ton

CFR Southeast Asia

Price: $1,110/ton

Change: ▲ $70/ton

Bid Range: $1,080–1,090/ton

Offer Range: $1,150–1,200/ton

Northeast Asia Prices Surge on Active Buying

Northeast Asian and Chinese ethylene prices rose sharply for another week, supported by active purchasing from Chinese traders and several end users. Prices increased by $80/ton, or nearly 8%, breaking above the $1,100/ton level.

Chinese traders had expected US Gulf cargoes to arrive in October, but these shipments have now been delayed, with the earliest arrivals expected in November.

The absence of the October cargoes prompted traders to raise bids significantly for second-half September and early-October deliveries. Several transactions were reported at $1,120–1,130/ton CFR China for late-September arrival, while another cargo was reportedly sold at $1,130/ton CFR South Korea for mid-September delivery.

Chinese trader bids increased from the high $1,000s/ton to around $1,100/ton CFR China/NEA, while offers moved above $1,150/ton.

The rally in November Brent futures also pushed Asian naphtha prices higher, providing additional support to ethylene values. Asian naphtha increased to $858/ton CFR Japan, compared with $797/ton the previous Tuesday, representing a 7.6% rise.

End users remain cautious about the extreme volatility in crude and naphtha markets, while the ethylene forward curve has moved into contango.

A Japanese trader said market participants are increasingly using hedging strategies to manage the sharp price swings, either to cover short positions or make forward sales. Producers are continuing to limit cracker operating rates because of uncertainty surrounding potential naphtha shortages if US-Iran tensions escalate further.

Sellers continue to favor floating-price transactions and are targeting premiums of $40–50/ton over CFR Northeast Asia assessments for September arrivals. However, the sharp increase in spot prices has led to more fixed-price offers for late-September and October cargoes.

Several traders in China, Taiwan and South Korea still need to cover September and early-October requirements, while some transactions have been completed on a floating-price basis. Traders were reported to have purchased spot cargoes on a CFR South Korea/China basis at premiums of $35–45/ton over CFR NEA assessments for late-September delivery.

Meanwhile, Sinopec kept its ethylene list price unchanged at CNY 8,200/ton. Spot ethylene prices in East China and Shandong increased by CNY 150–250/ton to CNY 8,300–8,400/ton.

Domestic Chinese supply has also tightened because of upcoming and extended maintenance shutdowns, along with continued reductions in cracker operating rates caused by feedstock concerns and earlier margin pressures.

China Cracker Operating Status

Wanhua Chemical — Yantai, China

Capacity: 1.2 million tons/year

Status: Turnaround began in May and was extended; restart date remains unconfirmed.

Fujian Refining & Petrochemical (FREP) — Quanzhou, China

Capacity: 1.0 million tons/year

Status: Cracker shut in early August for a scheduled turnaround of around two months.

CNOOC and Shell (CSPC) — Huizhou, China

Capacity: 1.0 million tons/year

Status: Operating rate reduced to 80% because of feedstock concerns.

Zhejiang Petrochemical — Zhoushan, China

Capacity: 1.4 million tons/year

Status: Operating rate reduced due to feedstock concerns.

Sinopec Hainan PC — Yangpu, China

Capacity: 1.0 million tons/year

Status: Operating at around 70% because of feedstock concerns.

PetroChina Guangxi PC — Qinzhou, China

Capacity: 1.2 million tons/year

Status: Operating rate reduced due to feedstock concerns.

Ningbo Huatai Wealthy Polymer Material — Ningbo, China

Capacity: 0.85 million tons/year

Status: Operating at around 70% because of feedstock concerns.

South Korean supply is expected to tighten further as several crackers undergo maintenance during September and October. LG Chemical plans to shut its 1.3 million tons/year cracker in mid-October for around 45 days, while KPIC is expected to take its 800,000 tons/year cracker offline in mid-October for approximately 40 days. The KPIC cracker is currently operating at around 65%.

In Taiwan, state-owned CPC and Formosa Petrochemical have continued running their crackers at reduced rates since the beginning of the year.

Across China, Japan and Taiwan, cracker operating rates remain under pressure from feedstock availability and margin concerns. The continuing US-Iran conflict is also creating uncertainty over the security of naphtha supplies moving through the Strait of Hormuz.

Southeast Asia Prices Extend Gains on Tight Availability

Southeast Asian ethylene prices also recorded their fourth consecutive weekly increase, following the bullish trend in Northeast Asia and increasingly limited regional supply. Buyers continued to outnumber sellers, while the lack of deep-sea ethylene arrivals strengthened sellers' position and pushed offers higher.

Spot prices increased by $70/ton, or around 7%, this week, with both fixed-price and formula-linked offers reported.

Producers remain focused on naphtha availability as vessel traffic through the Strait of Hormuz has shown little improvement, according to a Singapore-based trader. Higher Asian naphtha prices have added to the bullish sentiment, while Southeast Asian traders continue searching for both fixed- and floating-price cargoes.

A Singapore trader said current ethylene prices are reflecting the physical supply risks, but sustained high feedstock costs could eventually lead to demand destruction if downstream PE, SM and MEG markets are unable to absorb the increases.

Cargoes from Southeast Asia, South Korea and China were offered on both fixed- and floating-price bases. Producers raised targeted premiums to $40–50/ton over CFR SEA assessments, while some deals were concluded at $35–45/ton premiums over CFR NEA assessments.

Fixed-price offers moved above $1,150/ton CFR SEA, compared with bids at $1,080–1,090/ton. Floating-price bids also increased to premiums of $25–35/ton for late-September arrivals.

Southeast Asian supply is expected to remain constrained through September. Malaysia's PRefChem restarted its 1.29 million tons/year Pengerang cracker in mid-June but continues to operate it at around 60–70%, according to traders.

Rayong Olefins has kept its 900,000 tons/year Map Ta Phut cracker shut since early March, with a tentative restart expected in September.

Aster Chemicals & Energy continues to operate its 1.15 million tons/year Pulau Bukom cracker at around 50–60% after completing a month-long planned maintenance shutdown in August.

PT Lotte Chemical Indonesia has reduced operating rates at its 1 million tons/year Cilegon cracker to around 50–55% because of feedstock concerns, while ExxonMobil's older 900,000 tons/year Jurong cracker has remained shut since March.

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