The movement down in ethylene in the exhibit below is significant, as it begins to show the overhang that the US has with ethylene supply. The price has to fall further before ethylene is likely to find any interested spot buyers outside the US (note that the US exported significant volumes of ethylene from November through January). The more important question is whether the weaker ethylene price starts to undermine derivative prices, especially polyethylene. We believe that will happen either late this quarter or early next, but only when US polymer buyers are satisfied that they have adequate inventory to meet what has been surprisingly strong demand. For more on this see our daily report.
Source: Bloomberg, C-MACC Analysis, May 2021
