Ethylene
S&P Global / ICIS
The most produced organic chemical on earth, and in 2026 there is far too much capacity to make it.
Top Producers
share of global capacity, 2025
Top Consumers
share of 2025 consumption
Main Uses
global ethylene demand by derivative, 2024
Top Exporters
share of the small seaborne ethylene trade, 2025; cross-border trade is a low single-digit percentage of production because ethylene is mostly consumed where it is made
Top Importers
share of the small seaborne ethylene trade, 2025, by destination
Global capacity
roughly 235 million tonnes/yr
as of 2025
Global demand
roughly 190 million tonnes
as of 2025
Global operating rate
roughly 80%
as of 2025
Share converted to polyethylene
roughly 60%
as of 2025
US spot pricing point
FD Mont Belvieu, US cents per pound
as of 2026
Ethylene is the largest-volume building block in chemistry, a two-carbon olefin produced by steam cracking ethane, propane, butane, or naphtha. Global capacity reached roughly 235 million tonnes a year by 2025 against demand of roughly 190 million tonnes. Around 60 percent of ethylene becomes polyethylene; the rest feeds ethylene oxide for antifreeze and polyester, ethylene dichloride for PVC, ethylbenzene for styrene, and a long tail of derivatives. Because ethylene is a reactive gas that is expensive to store and ship, most of it is consumed within integrated complexes or moved by pipeline, and the open spot market is small relative to production.
The cost curve splits the world. US Gulf Coast crackers running cheap shale ethane and Middle East crackers on advantaged feedstock sit at the bottom; naphtha crackers in Europe and Northeast Asia sit at the top. China's enormous capacity buildout from 2020 onward pushed global operating rates down to roughly 80 percent, the weakest sustained stretch in four decades, and forced rationalization at the high end: ExxonMobil announced closure of its Gravenchon cracker in France in April 2024, and further European and Asian shutdowns followed through 2025 and 2026.
Trading is assessment-based. S&P Global Commodity Insights, ICIS, and OPIS PetroChem Wire publish daily spot prices for US pipeline ethylene at Mont Belvieu and Choctaw, CIF Northwest Europe, and CFR Northeast Asia. CME lists cash-settled Mont Belvieu ethylene futures against OPIS PetroChem Wire assessments, but volumes are modest; most hedging is done indirectly through the feedstock leg, by producers locking ethane or naphtha and accepting merchant ethylene exposure.
How It Trades
| Venue | Physical spot and contract markets assessed by S&P Global, ICIS, and OPIS PetroChem Wire; CME futures referencing Mont Belvieu |
| Benchmark contract | US spot pipeline ethylene FD Mont Belvieu (PRA-assessed); CME Mont Belvieu Ethylene (OPIS PCW) cash-settled futures sit on top of the assessment |
| Contract size | CME futures: 100,000 pounds per contract; physical spot deals are typically multiples of a million pounds |
| Price terms | US cents per pound at Mont Belvieu; USD per tonne for European and Asian cargoes |
| Settlement | Futures settle financially on the OPIS PetroChem Wire monthly average; physical volumes settle via pipeline transfer at Gulf Coast hubs |
| Typical curve | Flat to gently contangoed; the visible curve is short because liquidity beyond a few months is thin |
| Liquidity | Thin. Real price discovery happens in PRA assessments of physical deals; futures open interest is a small fraction of propane's |
Where It Trades
approximate split of futures and OTC volume, 2025; most petrochemical volume trades OTC against price assessments
Supply and Demand
Top producers
- China (largest national capacity after the 2020s buildout)
- United States (Gulf Coast ethane crackers)
- Middle East (Saudi Arabia, Iran, Qatar, UAE), South Korea, Japan, Europe
Capacity is concentrated in integrated complexes; merchant ethylene available to the spot market is a small fraction of nameplate output.
Top consumers
- Integrated polyethylene plants worldwide
- China (also the largest importer of ethylene derivatives)
- US Gulf Coast and Middle East derivative units
Major uses
- Polyethylene: roughly 60 percent
- Ethylene oxide / glycols (polyester, antifreeze): roughly 15 percent
- Ethylene dichloride for PVC: roughly 10 percent
- Ethylbenzene for styrene: roughly 6 percent; balance to alpha-olefins and others
What Moves the Price
- Ethane and naphtha feedstock costs, which set the regional cost curve
- Cracker operating rates, turnarounds, and unplanned outages on the Gulf Coast
- Chinese capacity additions and derivative import appetite
- Polyethylene demand growth and converter margins downstream
- Hurricane and freeze risk to the concentrated Texas and Louisiana asset base
- European cracker closures tightening the Atlantic basin balance
- Co-product credits: propylene and butadiene values change naphtha cracker economics
Moments That Made the Market
2008
Global cracker margins collapse with the financial crisis; a wave of older European and Asian capacity is rationalized
2012
Cheap shale ethane makes US crackers among the lowest-cost producers globally, triggering the second US construction wave
2017
New US ethane crackers begin starting up: Dow Freeport and Chevron Phillips Baytown lead roughly 15 million tonnes of additions through 2023
2021
Winter Storm Uri shuts most Gulf Coast ethylene capacity in February; force majeure declarations cascade through derivative chains and US prices spike to records
2022
Shell's Monaca cracker in Pennsylvania starts up, the first US ethylene plant built outside the Gulf Coast in decades
2024
ExxonMobil announces closure of the Gravenchon, France cracker in April; European rationalization accelerates
2025
Global operating rates hold around 80 percent as Chinese additions outpace demand; margins at Asian naphtha crackers stay negative for much of the year
What Changed Since the 2010 Handbook Era
- The US moved from mid-curve producer to global low-cost exporter of ethylene and its derivatives
- China built itself from structural importer toward near self-sufficiency in ethylene equivalents, removing the demand sink that balanced everyone else
- A listed futures contract now exists at Mont Belvieu where 2010 offered only bespoke swaps, though physical assessments still dominate price discovery
- Operating rates replaced oil price as the margin story: the 2023 to 2026 trough is a capacity problem, not a feedstock problem
- Europe shifted from exporter of chemistry to a region in managed industrial retreat, with multiple cracker closures announced from 2024 onward