Europe ethylene spot prices turn firmer on demand, feedstock, looming cracker turnarounds

LONDON (ICIS)–European ethylene spot prices have firmed week on week on the back of better-than-expected demand amid higher feedstock values and an increasing focus on upcoming planned cracker maintenance outages.

Spot deals this week have been reported at discounts of 32-35% on the pipeline, prior deals had been at discounts of around 38-39%.

Producers say they have received several requests for additional volume offtakes in July. This is being attributed to a combination of factors:

• Improved sentiment from domestic PVC players following the imposition of tariffs on imports ex-Egypt and the US
• Continued high container freight rates which are restricting some derivative imports
• Recent hurricane-related production and logistics disruptions ex-US
• Firmer month-on-month naphtha values which is likely to drive discussions for the August contract reference price settlement
• Planned cracker maintenance due to get underway from September particularly that due in Germany with alternative supply flexibility likely to be limited at that time due to pressure issues on the ARG pipeline.

With crackers having been run at rates closely aligned with contractual demand – still very much below normal albeit better than in 2023 – there is not too much flexibility for additional volumes at short notice.

“Many will have assumed that ethylene supply would always be plentiful,” a source said, “and now they find that it is not the case.”

Cracker operators have avoided as far as possible marginal tonne production as spot appetite has been extremely low unless at deep discounts to the prevailing contract price.

Crackers are underutilised, so in theory, there is space to ramp up. But with August around the corner and few indications at this stage how long this better-than-expected demand will be sustained, sources assume producers will be reluctant to ramp up production in July.

Thumbnail photo: Flooding in Houston, Texas, in the wake of Hurricane Beryl on 8 July 2024, one of the causes of firming ethylene prices. Source: Carlos Ramirez/EPA-EFE/Shutterstock