US C2 talks go on; 2-month settlement possible

12 May 2008 23:13  [Source: ICIS news]

HOUSTON (ICIS news)--US ethylene contract negotiations for April were expected to continue this week, but market participants on Monday said an agreement may not be reached until the end of May, along with a settlement for the current month.

US ethylene producers - faced with higher production costs, particularly for those running on heavier feeds - nominated April contract increases of 5-6 cents/lb ($110-132/tonne or €72-86/tonne), while buyers have resisted an increase, citing weak demand amid a slower US economy.

US March ethylene settled 3 cents/lb higher from February at 61.50 cents/lb, according to global chemical market intelligence service ICIS pricing.

Talk of a settlement at plus 2 cents/lb for April has circulated in the market, but two sources involved in the talks said the figure was not representative of the market. 

One buyer said it would continue to hold out for a flat settlement in April, arguing that sellers could look for higher margins in the spot market, where the monomer, despite an upward trend, has traded below contract levels.

Spot ethylene for May traded in a range of 55.75-57.00 cents/lb last week, up from 52.75-54.50 cents/lb a week earlier.

US spot ethylene for May was offered at 63.00 cents/lb on Monday, while a bid for June was heard at 55.00 cents/lb, according to sources.

US producers have also nominated contract increases of 5 cents/lb for May.

Major US producers of ethylene include Chevron Phillips Chemical, Equistar, ExxonMobil, INEOS and Shell Chemicals.

Buyers include Dow Chemical, Georgia Gulf, Occidental and Total.

($1 = €0.65)

For more on ethylene visit ICIS chemical intelligence

By: William Lemos
+1 713 525 2653

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