USGC ethylene spot prices have weakened since reaching a multi-year peak in mid-April, something we have discussed for some time. This week's downtick in propylene values is a bit more unique as it has occurred alongside weakness in other monomer markets, which is a general trend that appears likely to gain momentum. Most monomer markets are weakening from recent 2Q21 highs in the US. We broadly find an increasing level of support for our view that many commodity chemical product prices will peak for the year in 2Q21. Exhibit 1 in our Daily Report shows an Asia arbitrage that should allow US ethylene to move to Asia, but is in the potential to take it because of local Asia surpluses, Asia prices will remain under pressure, although ethylene values in this region are fast approaching costs. We will soon be back to the previous equilibrium in an oversupplied ethylene market, where the economics of Asia production sets prices, and US exporters make a margin based on their cost advantage. The question now is how long it is before polymer prices follow.
