Europe receiving majority of US ethylene exports: Navigator

Europe has the widest arbitrage for US ethylene exports and attracted the bulk of those flows in the first half of 2022 while Asian demand waned, Oeyvind Lindeman, chief commercial officer for Navigator Holdings, said Aug. 19.

"Whereas the majority of ethylene was transported across the Pacific in the past, most of the volumes are now heading to Europe," he said during the company's Q2 2022 earnings call. "This results in half the demand for vessels due to half the distance needing to sail, which is pretty logical."

He also said global petrochemical demand was expected to be soft in the short term until China "returns to a more normal state of consumption and production. In the meantime, Europe will continue to import most of these volumes."

Asian petrochemical demand has not rebounded from COVID-related shutdowns earlier in the year, which reduced consumption and production. And European demand for imports has risen as record-high energy prices and high naphtha feedstock prices have prompted olefin rate cuts.

Navigator co-owns with Enterprise Products Partners the largest of two US ethylene export terminals. Navigator said the terminal along the Houston Ship Channel shipped out 268,444 mt of ethylene in Q2, up less than 1% from 267,110 mt in Q1, but up 72% from 155,428 in the year-ago quarter.

Platts FOB USG export ethylene prices were assessed Aug. 18 at 32.25 cents/lb, or $719.98/mt, S&P Global Commodity Insights data showed. European ethylene prices were assessed Aug. 19 at $812/mt FOB CIF Northwest Europe, and Asian prices were assessed Aug. 19 at $820/mt CFR Northeast Asia and $920/mt CFR Southeast Asia.

The latest US International Trade Commission data showed Europe received 78% of 356,746 mt of US ethylene exported in the first half of 2022, down from 89% of 283,434 exported in the first half of 2021. The Houston terminal has been operating at 120% of its 1 million mt/year capacity ,the company's earnings presentation said, and ramped up throughout 2021 after shipping out its first cargo in January that year.

Belgium was the top recipient of US ethylene in the first six months of both years, having received 47% in the first half of 2021 and 61% in the first half of 2022. China was second in the first half of 2021 with 27%, but that fell to 3.3% of the total shipped out in the first half of 2022, ITC data showed.

"All eyes are on China and when they are getting out of their malaise with the zero-COVID strategy and so forth," Lindeman said. "But it's good to see that at least Europe, which have their own issues, are importing or taking the role of China in terms of ethylene."

Enterprise and Navigator are planning to expand their ethylene export terminal by 50% in the second half of 2023 and to more than 2 million mt/year by 2025, according to the companies.