There has been a surge in ethylene cargo fixtures from Europe to Asia as traders attempt to clear a surplus of material in the region, according to market sources.
Between 30,000-50,000 mt of ethylene will be heading to Asia in April, with the trend likely to continue in to May, sources said.
Little ethylene has been moved east so far this year while last year only around 200,000 mt was exported from EU countries to Asia.
"Producers are pushing material outside the region to rebalance the market," one trader said.
Prices in Asia were steady Tuesday at $1,360/mt CFR NE Asia while European spot prices, which plunged $33.50/mt Monday, fell a further $1.50/mt to $1,259/mt CIF NWE.
This represents around a 5% discount to the April contract price in Europe of Eur1,067/mt ($1,320/mt) and sources said that the discounts have been rising, with some deals now being concluded at double-digit discounts.
Freight from Europe to Asia is currently put at around $295/mt.
The European ethylene market has come under pressure in recent days amid talk of downstream outages, although S&P Global Platts has not been able to confirm these, and expectations of an influx of US-produced polymers.
US ethylene prices are hovering around record-low levels, with April pricing last assessed at 14.25 cents/lb ($314.07/mt).
"It is not sustainable to have negative margins in the US and positive ones in Europe. There will be more pressure from the US, with exports of polyethylene to Europe. Over the past three to four years the market was tight, but the new cycle has started now," the trader said.
