Asian Ethylene Prices Surge as Naphtha Crisis Tightens Supply

Asian ethylene prices have surged in May as a feedstock crisis, stemming from supply chain disruptions in the Middle East, tightens availability. The situation has shifted the market from oversupply to scarcity, benefiting producers using non-naphtha feedstocks.

The primary driver is a spike in naphtha prices, the dominant feedstock for crackers in Asia. Disruptions in the Strait of Hormuz have pushed naphtha prices to around $908 per tonne in mid-May, a 65% increase year-on-year. This has forced Asian naphtha-based crackers to scramble for alternative supplies, nearly doubling ethylene prices at their peak.

The feedstock squeeze has led to production cuts at several Asian facilities. Some large complexes have declared force majeure due to supply chain issues. A South Korean producer, for instance, has reduced operating rates at its naphtha-fed units to approximately 60%, with other regional players also scaling back.

These shifts have altered the competitive landscape. Integrated producers and those with access to cheaper or long-term feedstock are better insulated. Buyers are advised to prepare for elevated prices, monitor market conditions, and prioritize supply security.