What Makes Alkene Prices Skyrocket in 2021?
European ethylene and propylene markets grew in January after an unusually strong December. Spot prices on ethylene – the material used to manufacture plastic bags and films – in the US reached a 14-month peak in December 2020 due to increased demand for this monomer and its derivatives in both internal and external markets. The internal demand for ethylene may remain high during most of 2021 due to consumer behaviour changes. According to Howard Ungerleider, President and Chief Financial Officer for Dow, the demand for packaging has been stably rising since the beginning of the pandemic. Ethylene and its derivatives turned out to be relatively resistant to a decrease in demand caused by COVID-19 largely due to a rising need for packaging materials.
High demand in both home and export markets, European manufacturers definitely rose. The demand for PVC, however, showed a significant decrease among consumers in January, which is associated with the season – the peak of the winter – and downtime of production capacities.
Miguel Cambeiro’ comment:
Actually, it was a decrease in operational rates plus significant shutdowns during 2020 that ensured a tight supply of the alkene market. In the middle of the last year, no one definitely expected premium pricing or bias from the contract pricing, but it’s definitely the result of 2020. Shipment management and reduction of shipment volumes ensured an approximately 36%-rise of prices for co-operators from early December to January.