SunSirs: Ethylene Prices Hit Rock Bottom: Supply-Demand Imbalance Drives New Annual Low

In November 2025, the Asian ethylene market quietly reached a “freezing point”—Northeast Asia ethylene (CFR) plunged to $727-735/ton, while China's East China market followed suit, bottoming out at 6,050-6,200 yuan/ton. Both core markets simultaneously recorded their lowest prices of the year. In September, Northeast Asia ethylene prices stood at $848-854/ton. Within just two months, prices plummeted by 14%.

Massive Supply Pressure:

In recent years, a large number of major ethylene plants have come online globally, particularly in East Asia and the Middle East. China, as the world's largest ethylene consumer, has seen continuous capacity releases from its large-scale private integrated refining and petrochemical projects, significantly altering the regional supply-demand landscape. This new capacity needs to be absorbed by the market, creating immense supply pressure. Additionally, low-cost ethylene from the Middle East and North America—particularly feedstock sourced from inexpensive ethane—has flooded the Asian market, further exacerbating regional oversupply.

Persistent Demand Weakness:

Affected by multiple factors including sluggish end-user consumption, export pressures, and high inventory levels, coupled with the “Golden September” peak season demand falling short of expectations, all four major industries (polyethylene, ethylene glycol, PVC, styrene) showed pronounced weakness. Demand growth reached only 3.9%, far below the 14.3% growth rate of ethylene capacity. Consequently, Chinese downstream plants responded by drastically reducing operating rates and delaying purchases, fundamentally weakening demand support for ethylene feedstock and stripping it of its most critical price anchor. Against this backdrop of oversupply, the sharp contraction in demand became the final straw that broke the price, driving it to its lowest point of the year.

Collapse of Cost Support:

The price of naphtha, ethylene's primary feedstock, has fallen significantly alongside the weakening international crude oil market. As the core feedstock for cracking units, naphtha accounts for approximately 60%-70% of ethylene's total production costs. Its sustained decline has directly removed the “cost floor” supporting ethylene prices at the source. When the overall production cost curve shifts downward, ethylene's pricing benchmark follows suit.

In the short term, supply pressures persist due to the continued release of new domestic capacity coupled with the impact of low-priced overseas supplies. Downstream demand remains weak with little prospect of substantial improvement, and insufficient support from crude oil and ethane prices at the cost end. Ethylene prices are expected to maintain a weak trend in the near term.

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