ExxonMobil’s UK Plant Closure Stokes Ethylene Demand, Widens US-Europe Arbitrage

The sudden closure of ExxonMobil’s 770,000 metric tons/year ethylene plant at Fife, Scotland, has fanned demand and widened the arbitrage between the U.S. and Europe, a trading source told OPIS this week.

ExxonMobil announced in November that it planned to close its Fife facility, citing challenging market conditions including high supply costs and plant efficiency. Ethylene is a key precursor to polyethylene, which is used in a wide range of products including automotive manufacturing, construction,
packaging and medical equipment applications.

Olefin market sources have confirmed that ample ethylene stocks in the U.S. have found a welcome home in Northwest Europe due to low U.S. natural gas feedstock costs, a weak dollar versus the Euro, and competitive refrigerated vessel freight rates. These have combined to generate a healthy profit from imports of U.S. product into the European Aethylen-Rohrleitungs-Gesellschaft (ARG) pipeline system that also feeds into contractual spot customers inland.

“The U.S. is long and the ethylene arb is technically open,” a trader said. “The Fyfe Mossmorran closure has increased a demand that was not there before.”

Arbitrage widens further

At least 20,000 mt of ethylene was scheduled for export to Europe in the first week of February alone, priced at $430/mt FOB U.S. Gulf Coast. Of this, a 12,000 mt cargo was fixed for export in the week ending Feb. 13 for European discharge in March. On delivery, the cargo was priced at $686/mt CIF Northwest Europe.

U.S. prices have since declined, further widening the arbitrage and enhancing export margins into Europe. Another 12,000 mt of ethylene traded at $407/mt FOB U.S.G.C., also for discharge in March. Rising inland European pipeline prices were heard at around €761 ($895)/mt, an approximate $488/mt arbitrage margin for delivered imports of U.S. product into the inland ARG pipeline. Logistics and throughput costs are not factored in, however.

Maintenance, closures tighten European availability

Aside from planned maintenance due to affect around 2.5 million mt/year of production in Europe during the second quarter, a number of unplanned production glitches in crackers also added to ethylene supply constraints in the region. Almost 2 million mt/year of European ethylene closures were
announced in 2025, CMA data showed.

The closures mark an accelerated downsizing of European production capacity that has accompanied a protracted industry downturn, one that has been exposed by chemical feedstock cost advantages in the U.S.

The ExxonMobil plant stopped production on Feb. 3 with the loss of 400 jobs, according to the U.K.’s Unite Union. Supply chain shortcomings exposed the Scottish facility to the upstream cost structure and forced it to close, the same source told OPIS.

With the U.S. natural gas price expected to weaken further and crackers maintaining their existing operating rate levels, North American ethylene stocks are set to remain high through most of the first quarter, according to CMA.

And, looking ahead, Europe will continue to be a receptive market for U.S. ethylene exports throughout the second quarter turnaround season.

Reporting by Miguel Cambeiro, mcambeiro@opisnet.com