15 January 2009 21:51 [Source: ICIS news]
Ethylene is a feedstock for EDC which is, in turn, used to produce VCM.
US ethylene spot prices rose sharply after the new year, lifted by a brief jump in the upstream energy complex, market sources said.
Ethylene for January delivery last traded at 23.5 cents/lb ($518/tonne, €394/tonne) on 13 January, off a high of 24.5 cents/lb on 7 January.
That compares with December material sold at 16.5 cents/lb before the holidays.
“Ethylene prices have been soaring for the last two weeks,” a trader said. “Spot prices jumped from 17 cents/lb to 24.5 cents/lb, and the market is looking for an increase in contract prices as well.”
On the contract side, ethylene nominations for January were heard at plus 7 and 7.5 cents/lb.
Buyers acknowledged an increase was possible, but not at the magnitude proposed by producers. One buyer said monomer prices could go up 1 cent/lb if an upward trend in the spot market remained in place through the month.
“Prices are no doubt going up, but the question left is how long will it last,” the trader said.
Although sources saw no increase in demand, EDC and VCM buyers speculated that prices would increase.
“Prices have stabilised this week, and we are expecting an increase of a cent or two for next month,” a VCM buyer said.
VCM is a feedstock chemical in PVC production.
For downstream PVC, several producers nominated price hikes for February of 7 cents/lb last week amid a recovery in feedstock ethylene prices, while sources said discussions of December contracts continued between buyers and sellers.
Sources said January contract negotiations for PVC were more of a mixed bag. A price hike of 5 cents/lb was proposed by producer Formosa Plastics, while other producers were pushing for a rollover and buyers a moderate price drop.
The US EDC spot price range was pegged at $160-180/tonne FOB (free on board) USG (US Gulf), according to data from global chemical market intelligence service ICIS pricing.
The US VCM spot price range was at $400-425/tonne FOB USG.
EDC and VCM producers in the US include Formosa Plastics, Georgia Gulf, Oxy Vinyls, Oxy Mar, PPG Industries, Dow Chemical and Westlake.
(Additional reporting by William Lemos)
($1 = €0.76)
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