05 April 2010 23:13 [Source: ICIS news]
HOUSTON (ICIS news)--US ethylene contracts for March settled at 55.50 cents/lb ($1,224/tonne or €906/tonne), rising by 3 cents/lb from February on the back of firm demand and tight supply, market sources said on Monday.
The 6% jump, which is below a 57.50 cents/lb initial agreement last week, came within projections for the month.
Market sources had predicted ethylene for March would settle at an increase of 2-4 cents/lb.
The uptrend in the monomer contract owes to continued tight supply, a producer said, citing a lingering impact from a number of cracker outages in the US earlier this year.
Tight supply is also being cited as the main driver behind a new surge in spot prices, which could eventually result in higher contract prices in April.
Ethylene for April traded on Monday at 72.00 cents/lb, down from a deal done at 73.00 cents/lb last week, but up from a range of 61.00-63.00 cents/lb in the last week of March.
The spike in spot prices last week came as two US crackers were being taken off line for maintenance, sources said.
Dow Chemical was said to be shutting down its 499,000 tonne/year Plaquemine 2 cracker in Louisiana for a 50-day turnaround, while INEOS was heard to be planning maintenance at one of its US crackers in Chocolate Bayou, Texas.
An INEOS spokesperson last week declined to comment on the procedure, citing policy. The company has 1.8m tonnes/year of combined ethylene capacity at the site.
A Dow spokesperson did not respond to a request seeking confirmation of the shutdown at Plaquemine.
Despite the latest spike in spot prices, the market continued to bet on upcoming weakness in ethylene for the months ahead.
The spot market remained backwardated on Monday as ethylene for May was being offered at 61.00 cents/lb. Third-quarter spot material was offered at 41.00 cents/lb with a bid at 34.00 cents/lb.
Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell 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 = €0.74)
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