Ethylene prices experienced slight softening prior to the National Day holiday, and are likely to remain weak in the post-holiday period.

Lead-in: Before the holiday, the ethylene market trended weaker with volatility. East China ethylene prices fell to around 9,300 RMB/ton, while Shandong ethylene prices dropped to 8,950 RMB/ton. Northeast Asia USD-denominated prices softened to approximately $1,160/ton. During the holiday period, downstream enterprises primarily executed existing orders, resulting in a lack of new market negotiations. However, influenced by bearish supply and demand factors, USD-denominated prices continued to soften.

1. Market Review: Bearish Supply-Demand Dynamics Lead to Price Softening Pre-Holiday

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Domestic Market:
Before the holiday, the spread between pure benzene and styrene continued to narrow, exacerbating losses for styrene producers relying on externally sourced feedstocks. According to Chempricehub statistics, the weekly average profit for styrene during the week ending September 30 was -1,438 RMB/ton, a significant quarter-on-quarter decline of 54.46%. Dragged down by widening losses, expectations for production cuts and plant shutdowns among related manufacturers rose, leading to a marked decrease in willingness to purchase external ethylene. Additionally, to mitigate sales risks associated with inventory accumulation during the holiday, companies actively offered discounts to clear stock before the break. Pressured by overall weak demand, domestic ethylene quotes softened, with discounting more pronounced in the Shandong region. Although the East China market benefited from support via nearby contract orders—alleviating some shipment pressure—persistently sluggish downstream demand led to price declines there as well. As of September 30, East China ethylene prices retreated to 9,300–9,350 RMB/ton, while Shandong ethylene prices dipped to around 8,950 RMB/ton.

During the National Day holiday, domestic road transport circulation largely stalled, resulting in very thin spot market transactions. Downstream producers focused mainly on consuming previously locked-in orders and maintaining current production schedules, with limited proactive new procurement. Only some downstream entities with rigid restocking needs maintained small-volume purchases. Due to the slowed circulation pace, the market lacked new transaction guidance; downstream buyers generally referenced pre-holiday price levels for their purchases. Consequently, overall acceptance prices remained consistent with pre-holiday levels, and spot prices did not fluctuate significantly during the holiday.

Northeast Asia Market:
Pre-holiday, Northeast Asia ethylene USD prices oscillated downward. Increased proactive load reductions at major external procurement downstream units, particularly for PVC and styrene in Northeast Asia (especially China), directly suppressed demand for imported USD cargo. Simultaneously, low-priced ocean freight cargoes purchased earlier by downstream users arrived in concentrated batches, further loosening regional supply. Under the influence of these multiple factors, mainstream pre-holiday ethylene USD negotiations fell back to around $1,160/ton. Entering the holiday period, bearish supply-demand factors continued to ferment, extending the downtrend in the USD market, with prices probing further down to $1,150/ton.

2. Supply Side: Insufficient Middle Eastern Feedstock Reduces MTO Output

Table 1: Comparison of Domestic Ethylene Production Changes by Process

Data Source: Chempricehub

For the week ending October 1, domestic weekly ethylene output was 1.1285 million tons, an increase of 19,600 tons week-on-week. Specifically, naphtha cracking output was 755,800 tons (+17,800 tons w/w); combined CTO/MTO output was 176,500 tons (-100 tons w/w); and light hydrocarbon cracking output was 196,200 tons (+1,900 tons w/w). Among all production processes, only Methanol-to-Olefins (MTO) ethylene output declined. This was primarily due to insufficient methanol supply from the Middle East and high methanol prices, causing a notable drop in MTO-based ethylene production compared to previous periods. Capacity utilization for this sector fell to 33%. The shortage of sellable ethylene resources from domestic MTO producers is also one of the key reasons why the ethylene downtrend has been less severe than that of its downstream derivatives.

3. Demand Side: Low Operating Rates of Externally Sourced Derivatives Weaken Ethylene Demand Support

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On the demand side, derivative sectors are currently operating at relatively low loads within their cycles. This is especially true for the two major externally procured downstream products, styrene and PVC, where ethylene procurement demand remains persistently weak. In the styrene sector, industry loss pressures have not yet eased, leading to increased load reductions or shutdowns at certain units and a clear decline in enthusiasm for external ethylene sourcing. Similarly, the PVC sector is constrained by poor internal profitability and soft end-market demand, keeping operating rates at low levels and limiting ethylene consumption. The overall sluggish performance of these two main downstream sectors imposes significant constraints on the ethylene market from the demand side.

4. Outlook: Compounding Losses in Key Externally Sourced Derivatives Limit Demand Recovery

Table 3: Weekly Domestic Ethylene Data Forecast

Data Source: Chempricehub

The post-holiday ethylene market is expected to remain volatile and weak. On the cost side, crude oil prices are anticipated to stay firm, and feedstock prices for naphtha and methanol remain strong, providing robust cost support for ethylene. On the supply side, Nanjing Chengzhi’s Phase 1 small-scale MTO unit is expected to undergo maintenance after the holiday. Furthermore, the restart of planned MTO units will likely be delayed, leading to a slight decrease in ethylene output. While sellable ethylene resources from MTO producers are limited, the upcoming commissioning of a high-pressure polyethylene (LDPE) unit at Yulong Petrochemical after the holiday will further reduce available commercial ethylene volumes. Overall, domestic commodity supply is not abundant. On the demand side, deepening losses in derivatives like styrene and PVC clearly constrain ethylene market demand. Amidst mixed bullish and bearish supply-demand factors, ethylene prices are predicted to trend downward with volatility. East China prices may hover around 9,200–9,300 RMB/ton, while Shandong prices may range around 8,850–8,950 RMB/ton.