The domestic ethylene market strengthened this week, supported by improving downstream demand, tighter spot availability in East China, and rising feedstock costs. Mainstream ex-tank prices in East China reached RMB 8,600–8,850/tonne, while Shandong prices rose to around RMB 8,300/tonne. Meanwhile, CFR Northeast Asia prices increased to approximately USD 1,060–1,150/tonne as seaborne supply tightened.

Stronger Demand Supports Domestic Prices

Improved macroeconomic sentiment and rising prices for downstream derivatives have encouraged buying interest. Major producers in East China focused mainly on contract deliveries, leaving limited spot cargoes available and pushing prices higher.

East China prices increased by RMB 400–450/tonne week-on-week, while Shandong prices rose by around RMB 300/tonne. However, supply in Shandong remains relatively sufficient, limiting the pace of price increases compared with East China.

Northeast Asian Supply Remains Tight

The Northeast Asian ethylene market also remained firm. Higher US export prices and freight costs have closed the US-Asia arbitrage window, reducing deep-sea cargo availability.

At the same time, several producers in South Korea and Japan are scheduled for maintenance during September and October. This is expected to keep regional supply relatively tight and provide continued support for CFR Northeast Asia prices.

However, high ethylene prices are putting pressure on downstream producers, particularly PVC-related industries. The widening gap between buying and selling offers has resulted in relatively limited spot transactions.

Feedstock Costs Provide Further Support

Rising prices for naphtha and methanol are providing additional cost support for ethylene. International crude oil prices are also expected to remain elevated amid continued geopolitical tensions and shipping risks around the Strait of Hormuz.

WTI is expected to fluctuate around USD 84–93/bbl, while Brent could remain within USD 89–98/bbl in the near term. If geopolitical tensions persist, elevated crude oil prices could continue to support ethylene feedstock costs.

Outlook

Ethylene prices are expected to remain firm in the short term, supported by tight spot availability in East China, stronger downstream demand, and elevated feedstock costs.

East China ethylene prices are expected to move toward RMB 8,600–8,900/tonne, while Shandong prices may range between RMB 8,300–8,500/tonne. CFR Northeast Asia prices are expected to fluctuate around USD 1,080–1,150/tonne.

Looking further ahead, planned maintenance at crackers in South Korea and Japan could keep regional supply under pressure. However, the potential restart of domestic MTO units may gradually ease China's supply tightness.

Overall, the ethylene market is likely to remain firm but volatile, with supply conditions, downstream demand, feedstock costs, and geopolitical developments remaining the key factors to watch.