Ethylene Approaching $1000... Domestic Companies Anticipate Benefits from Supply-Demand Imbalance

Ethylene Price Plummeted to $400 per Ton, Now Reaches $970 per Ton

Surging Demand for Petrochemical Products Such as Packaging Plastics

Production Plummets Due to Facility Disruptions from Natural Disasters and Accidents

[Asia Economy Reporter Park So-yeon] The price of ethylene, known as the "rice of industry" and a basic raw material for petrochemical products, is soaring and approaching $1,000 per ton. This is due to a sharp increase in demand for petrochemical products such as packaging plastics amid the spread of the novel coronavirus (COVID-19), while production has sharply declined due to facility shutdowns caused by natural disasters and accidents.

According to market research firm Platts on the 27th, the price of ethylene in the Northeast Asia region reached $970 per ton as of that day. This is the highest price since April 2019. After entering the $900 range at $925 on the 20th of this month, it has shown a steep upward trend.

The market expects ethylene prices to surpass the $1,000 per ton mark within this month. Over the past two years, ethylene demand stagnated due to the US-China trade dispute, while the operating rates of ethylene production plants in the US and China increased, causing ethylene prices to plummet and Asian companies, including those in Korea, to face difficulties.

In particular, after the COVID-19 pandemic, prices dropped sharply to around $400 per ton. However, as manufacturing plants in various countries resumed operations, ethylene prices gradually stabilized before starting to surge in August due to the impact of a hurricane that struck the southeastern United States. The hurricane caused abnormalities in power facilities, leading the US, which produced ethylene based on inexpensive shale gas (ECC), to significantly reduce exports to the Asian region. Earlier this month, production disruptions at NCC facilities such as LG Chem's Yeosu plant and Japan's INEOS further fueled the rise in ethylene prices.

Ethylene is the most basic and representative raw material in petrochemicals, used to make various products such as plastics, films, vinyl, pipes, tires, and fibers. Domestic petrochemical companies purchase naphtha, extracted from crude oil, from refineries and operate cracking facilities (NCC) to produce ethylene. With US production significantly reduced, there is anticipation that domestic companies will enjoy a windfall. In Korea, Lotte Chemical, LG Chem, Hanwha Solutions, Daehan Petrochemical, and SK Innovation own NCC facilities.

Beyond short-term price increases due to supply-demand imbalances, there are also forecasts that the petrochemical industry will recover to a super-boom level next year. An industry insider said, "It is expected that ethylene demand will exceed supply next year due to expanded economic stimulus measures in various countries, visible vaccine development, and increased trade following Biden's election."

This content was produced with the assistance of AI translation services.