US ethylene spot margins soar 26% after cracker outages

31 August 2010 16:19  [Source: ICIS news]

Ethylene margins soarHOUSTON (ICIS)--US ethylene spot margins soared by 26% last week after spot prices surged on news of supply disruptions in Texas, the ICIS ethylene margin report showed on Tuesday.

Spot margins for ethane-sourced ethylene were assessed at 19.32 cents/lb ($426/tonne, €337/tonne) in the week ended 27 August, up from 15.28 cents/lb a week earlier, according to the report.

Ethane is the main feedstock used for US ethylene production.

Ethylene for August traded at 39.00-40.75 cents/lb last week, up from 34.50-35.50 cents/lb a week earlier, while September traded at 39.00-41.25 cents/lb, up from 34.50-36.00 cents/lb.

The surge stemmed from tight spot supply and news that Shell had experienced outages at its Deer Park complex in Texas.

The market seemed tight regardless of the crackers, but news of the outages may have triggered sentiment of an upswing, sources said.

Shell had restarted both crackers in Deer Park by this past Wednesday, according to market sources. A company spokesperson declined to comment on the disruptions, citing company policy.

Also providing support for ethylene last week was an increase in ethane prices.

Mont Belvieu ethane ended the week at 49.00 cents/gal, rising from 48.00 cents/gal a week earlier on firm demand and volatile trading. The feedstock inched above 51 cents/gal last week at one point, a buyer said.

The US ethylene spot market has been quiet so far this week with no deals heard.

September ethylene was offered at 41.00 cents/lb on Tuesday with no bids. Meanwhile, ethane was bid at 49.50 cent/gal and offered at 52.00 cents/gal on thin market activity, sources said.

($1 = €0.79)

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US ethylene margins

By: William Lemos
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