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Ethylene Prices Plummet, Hitting a Low in 4 and Half Years
Price Volatility of Chemical Products Widening
Ethylene Prices Plummet, Hitting a Low in 4 and Half Years
  • By Jung Min-hee
  • June 12, 2019, 11:09
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Ethylene prices have hit a low amid widening price volatility of chemical products.

Chemical product price volatility is expanding due to internal and external factors, including falling oil prices.

The price of ethylene, one of the most important products in the petrochemical industry, has hit the lowest point in four years. On the other hand, the price of propylene-butadiene is inching up due to the shutdown of major Korean petrochemical companies’ naphtha cracking centers (NCCs).

Ethylene prices posted US$1,418 per ton in 2014, US$1,098 in 2015, US$1,093 in 2016, US$1,196 in 2017 and US$1,250 last year. In January this year, the price fell below US$1,000 to US$934. After recovering to US$1,141 in February and US$1,012 in March, it went down to US$996 in April and May, respectively. On June 7, it marked US$810.

The price of naphtha is US$473 this month, so the ethylene margin, which is the price of naphtha minus the price of ethylene, is very low. The current naphtha price is similar to the average price of US$495 in 2017, but the current ethylene price is US$386 lower than that of 2017. This shows that the ethylene margin has fallen sharply. The price of naphtha has been on the decline for three consecutive weeks amid falling oil prices. It fell by US$69 (-13 percent) from last week to US$461.

The price of propylene in China is trending downward but is edging up in Korea. On Feb. 2, a technical defect put a halt to the restart of LG Chem's Daesan NCC plant, affecting the price of propylene in Korea. The suspension of the NCC plant is temporarily closing down butadiene and emulsion styrene butadiene rubber (ESBR) plants as they are linked to each other. There are no words yet on restart dates for these facilities.

In the meantime, demand for downstream products such as polyethylene (PE), which are produced from basic chemical products, is weakening with a glut of chemical products in the United States. The price of polyvinyl chloride (PVC), a main item of downstream products, is maintained amid a recent slight drop in demand. The price of synthetic rubber is showing stability thanks to rising prices of some natural rubber.