US July C2 nominations at plus 8-18 cts/lb

27 June 2008 17:45  [Source: ICIS news]

HOUSTON (ICIS news)--US ethylene producers nominated increases of 8-18 cents/lb ($176-$397/tonne, €111-250/tonne) for July amid a continued surge in the upstream energy complex, market sources said on Friday.

Three producers nominated 12, 13 and 15 cents/lb, respectively, while a fourth producer is seeking between 8 and 18 cents/lb for July, depending on the average crude oil price during the month.

The 8 cent/lb nomination would apply if crude averages less than $135/bbl, while the top initiative would be sought if crude averages more than $145/bbl, according to sources.

The initiatives for July came while June contracts were partially settled at plus 5.00 cents from May at 70.50 cents/lb. Market sources said a full settlement for June at that level could be reached next week.

Sentiment about July contracts was mixed.

While one source said a double-digit increase in July was a possibility, another said the top initiatives put forth were not realistic.

“It does not facilitate for a quick settlement,” the source said.

All buyers agreed that producers were faced with escalating cash costs, but one participant said the steep initiatives for July were only a hedge against possible new spikes in crude oil during the next 30 days.

Crude oil hit an all-time high of $142.26/bbl on Friday.

Spot ethylene prices were up this week, although activity was largely subdued except for Monday, when several deals for July were done.

Ethylene for July traded in a range of 67.50-68.50 cents/lb on Monday, up from deals done at 64.50-65.50 cents/lb in the week ended 20 June, according to global chemical market intelligence service ICIS pricing.

An ethylene bid/offer for July was heard at 66.00-69.25 cents/lb on Friday.

Chevron Phillips, Equistar, ExxonMobil, INEOS and Shell Chemicals are among the major producers of ethylene in the US.

Dow Chemical, Georgia Gulf, Occidental Chemical (OxyChem) and Total are among the buyers.

($1 = €0.63)

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By: William Lemos
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