04 May 2010 23:26 [Source: ICIS news]
HOUSTON (ICIS news)--US ethylene contracts for April settled down by 3 cents/lb ($66/tonne, €50/tonne), pressured by a sharp drop in spot prices, market sources said on Tuesday.
The settlement, which puts the monomer at 52.50 cents/lb, is the first drop for the monthly contract since July 2009, according to ICIS pricing.
Market participants said production costs remained largely steady in April, attributing the reduction solely to a slump in spot prices in the second half of the month.
US spot ethylene ended April trading at 42.00-47.25 cents/lb, down on average by 36.5% from 67.50-73.00 cents/lb in the first week of the month.
Market participants said ethylene contracts would drop again in May, pointing to continued pressure in the spot market.
Spot ethylene for May delivery traded on Tuesday at 42.00 and 43.00 cents/lb, while June ethylene traded at 40.00 cents/lb.
“It is expected to go down by 6 or 7 cents/lb in May,” a market source said, referring to the monthly contract.
The downtrend in US ethylene was supply-driven, as monomer production was catching up with demand following a series of cracker outages in the first quarter.
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 = €0.76)
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