Ethylene: it is difficult for the market to see positive results when ethylene quotation falls back

Up to now, the price of naphtha in Japan is $917.75/t CFR Japan, while the price of ethylene in Northeast Asia is $1100 / T in the same period. The price difference between ethylene and Japanese naphtha has further narrowed to $182.25/t, far lower than the average value of $384 / T in recent two years.

Energy and commodity prices rose, the conflict between Russia and Ukraine lasted longer than expected, and the normalization of monetary policy accelerated. The European Union's suspension of the oil embargo on Russia continued to ferment. The prospect of tightening the monetary policy of the Federal Reserve boosted risk aversion. The market was worried about the U.S. economic recession. The three major indexes of U.S. stocks fell across the board, and international crude oil prices fell. The support of ethylene cost side is loose. In addition, the on-site supply is increasing, the demand performance is flat, and the quotation continues to decline.

Asian ethylene has been in a shock downward trend recently. Before the deadline, CFR Northeast Asia ethylene closed at $1100 / ton, and the trading price of CFR Northeast Asia at $1080 / ton was heard on the floor. Although the operating rate of the unit remains at a low level, the on-site supply will still face the problem of oversupply under the background that many domestic manufacturers sell ethylene and a large number of imported goods enter the market.

In terms of demand, the demand for derivatives is poor and has been in a weak state for a long time. At present, EVA and Vinyl PVC have a good profit performance; The production process of externally extracted ethylene and MTO has a very obvious loss. And the uncertainty of domestic epidemic situation has a great impact on the restriction of terminal demand. In addition, the operating rate of downstream units is not high, and it just needs to follow up. Relatively speaking, the demand for ethylene is limited.

To sum up, the international crude oil has been volatile recently, and the naphtha price may fluctuate with the crude oil in the short term. Ethylene naphtha price difference has been significantly lower than the profit and loss balance, the support of the cost side has weakened, and the operating load of the unit remains low. However, under the background that public health events restrict the terminal demand, as well as the impact of a large number of imported goods and the increasing supply, the site is facing a situation of oversupply, and the quotation may continue to decline. It is expected that the short-term ethylene market in Asia will be supported by good news, dominated by weak operation, and focus on the operation of the unit and the balance of supply and demand in the domestic market.