Ethylene Prices Rise in Asia and Europe Amid Higher Feedstock Costs and Reduced Output

Ethylene prices in both Asia and Europe saw an uptick through late May 2026, driven by escalating costs of naphtha feedstock and deliberate reductions in cracker operating rates that tightened supply. Northeast Asian ethylene was assessed near $0.94 per kilogram, a 3.3% rise, while European material climbed 5.6% to approximately $1.50 per kilogram.

The surge was primarily fueled by feedstock economics. Higher naphtha costs, influenced by disruptions to global oil flows through the Strait of Hormuz, increased production expenses for steam cracker operators. Energy-intensive production amplified these elevated costs. Concurrently, efforts by operators in Japan and South Korea to cut run rates by 20-28% limited readily available spot supply, supporting firmer pricing despite unremarkable demand.

In Europe, cracker utilization rates hovered around 75% through 2025, reflecting weak demand and persistent oversupply. Fundamentals in Asia tightened more rapidly as operators reduced output amid uncertain feedstock flows. This dynamic has shifted the market direction towards cost-push pricing rather than demand-pull, a scenario that typically compresses margins for polyethylene and PVC converters unable to immediately pass on increased input costs.

Ethylene serves as a fundamental building block for a wide array of products, including polyethylene, ethylene glycol, and PVC. Consequently, higher ethylene costs will translate into rising raw material expenses for sectors such as packaging, construction, and textiles. Procurement teams are advised to review supply contracts for clauses addressing feedstock-driven increases and to assess their supplier base for potential disruptions, particularly those reliant on Middle Eastern supplies. With continued capacity cuts in Northeast Asia, the market's ability to absorb feedstock shocks is diminished, increasing the risk of sharper price volatility if crude oil prices remain elevated.