The run-up in ethylene spot prices in the US is interesting because it takes away most of the export arbitrage to Asia, as summarized in the charts below. Our margins models suggest that Asis is losing money making ethylene from imported naphtha today – especially in China and the arbitrage looks more interesting for US exporters of ethylene if you look at China costs as opposed to China prices for ethylene. The US remains a preferred supplier of ethylene to parts of Asia that would otherwise import from more local producers as our local cost analysis does not include a freight component. For example, an ethylene buyer in Southeast Asia could still get material from the US cheaper – even with higher US prices – than from China or other local exporters. For more on ethylene and propylene markets see our Daily
Source: Bloomberg, C-MACC Analysis, January 2022
Source: Bloomberg, C-MACC Analysis, January 2022