Introduction: Since late October, external sales from multiple ethylene plants have contracted sharply, shifting the domestic ethylene market into a supply shortage phase. Sellers became reluctant to sell while buyers chased higher prices, driving costs upward to reach an annual high of 10,700 RMB/ton on November 6. However, looking ahead, as available inventory in Shandong gradually recovers and the supply gap narrows, ethylene prices may weaken further in the short term.
From the comparison chart of ethylene and its major upstream/downstream products, it is evident that since November, major upstream and downstream derivatives of ethylene have been dragged down by weakening crude oil prices starting at the end of October, initiating a prolonged downtrend:
The collapse in costs and price cuts downstream led to a comprehensive downward shift in price centers across the industrial chain. However, during this period of continuous decline in upstream and downstream prices, ethylene prices rose against the trend. On November 6, East China ethylene prices reached their annual high, with mainstream transaction prices hitting 10,000–10,700 RMB/ton, a 6.7% increase compared to the end of October, exhibiting an independent market trajectory. This rise in ethylene prices, contrary to cost trends and upstream/downstream movements, was not driven by cost factors but primarily supported by changes in the phased supply-demand landscape, which will be analyzed below.
Supply Side: Available inventory from major external sellers has concentratedly decreased, significantly tightening commodity circulation.
| Enterprise | Region | Supply Change | Primary Reason |
|---|---|---|---|
| Jilin Petrochemical | Northeast | Reduced contract volume | Lower cracking load due to "less oil, more chemicals" strategy; reduced ethylene contract volumes. |
| Yulong Petrochemical | Shandong | No spot releases; restricted contract pickups | Low cracking plant loads; limited commodity availability. |
| Nanjing Chengzhi | East China | No ethylene for external sale | MTO unit shutdown; external sales interrupted. |
| Xinpu Chemical | East China | Shipments sold; reduced spot availability | Sale of ship cargoes; reserving volumes for local downstream users; tight spot supply. |
| Satellite Chemical | East China | Reduced available inventory | Temporary contract increases in Jiangsu in November; lower surplus available for sale. |
| Huatai Shengfu | Shandong | Limited sellable inventory | Ethylene pre-sold through month-end; current inventory largely locked in. |
Data Source: Chempricehub
The core driver of this price surge lies on the supply side. The concentrated reduction in available inventory from major domestic ethylene sellers has noticeably shrunk market commodity circulation. With limited sources available for traders and downstream users, sellers' bargaining power has strengthened significantly.
Demand Side: Profitability supports restocking willingness; forced follow-up despite high prices.
Based on the profit trends for ethylene and its major derivatives, the ethylene oxide (EO) industrial chain remains profitable, with decent cash flow performance on the production side. Although styrene margins are thin, they still retain marginal profits. Supported by profitability, enterprises have the motivation for proactive restocking. Furthermore, according to Chempricehub research, raw material inventories for upstream producers of EO and styrene are currently at low levels. Beyond proactive restocking driven by profit considerations, there is also rigid demand for restocking to maintain normal production operations. The contradiction of low raw material inventories is more pronounced in the styrene sector, indicating a stronger rigid restocking willingness compared to ethylene oxide.
In summary, the continuous narrowing of available sellable inventory in the market, combined with downstream enterprises being forced to accept higher prices for restocking due to production needs, represents simultaneous positive drivers on both supply and demand sides. This is the fundamental reason why ethylene prices surged to the annual high of 10,700 RMB/ton.
Entering this week, accumulated negative factors on the supply side were realized simultaneously:
Simultaneously, after prices crossed the 10,000 RMB threshold, the acceptance capacity of downstream derivatives for high-priced ethylene declined markedly. Downstream restocking sentiment turned cautious, and demand-side absorption weakened. The resonance of negative factors on both supply and demand sides pressured ethylene prices to continue falling. As of November 12, East China ethylene prices dropped to 10,000–10,100 RMB/ton, a decrease of approximately 300 RMB/ton from last week's high. Shandong ethylene prices fell to 9,800–10,000 RMB/ton, a drop of about 700 RMB/ton from last week's high, giving back most of the previous gains.
Looking ahead to next week, the downward price logic is expected to persist, but the driving focus will shift from "weakening demand" to "increased supply."
Overall, with ample supply and weak demand absorption unlikely to change in the short term, Shandong ethylene prices are projected to trade in the range of 9,500–9,800 RMB/ton next week, and East China prices in the range of 9,600–10,100 RMB/ton, indicating a continued downward shift in the price center.
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