UpdateUS March ethylene seen up 10% on higher ethane, spot surge

02 April 2011 00:21  [Source: ICIS news]

US ethylene up(adds words "were mostly" paragraph 1, adds paragraphs 3-18)

HOUSTON (ICIS)--US ethylene contracts for March were mostly settled on Friday at 53.75 cents/lb ($1,185/tonne, €830/tonne), rising by nearly 10% from February on higher production costs and a jump in spot prices.

The increase, which was in line with projections, followed a 10% rise in ethane prices and a nearly 16% surge in ethylene spot prices last month.

Spot ethylene traded in a range of 53.00-60.00 cents/lb in March, rising from 44.25-53.50 cents/lb in February.

Market participants also pointed to firm demand, citing strong derivative exports as a factor pushing ethylene prices up.

According to sources, 20% of US ethylene derivative output was being exported. For polyvinyl chloride (PVC), the number was as high as 40%, sources said.

US ethylene spot prices posted new gains this week on continued support from strong demand and limited supply.

Ethylene for April traded at 60.625-62.375 cents/lb, rising from March deals done in a range of 58.500-60.625 cents/lb last week.

Firm demand, scheduled maintenance at two US crackers and a recent allocation announced by Shell were all mentioned as driving ethylene up into April.

Shell last week said it would restrict monomer deliveries to 90% this month.

Market sources said the company was still dealing with problems accessing storage wells in Mont Belvieu, Texas, following the fire at the Enterprise Products facility in early February.

Feedstock limitations resulting from the Enterprise fire were also affecting operations at a cracker in Louisiana and that was likely leading to more demand for spot ethylene, a source said.

Meanwhile, two US crackers were scheduled for maintenance in April.

Chevron Phillips Chemical this week began a turnaround at its Sweeny 24 cracker in Texas, market sources said, adding that the 676,000 tonne/year unit would be off line until the end of the month.

Chevron Phillips has two other crackers in Sweeny with combined ethylene capacity of 1.2m tonnes/year.

LyondellBasell is also expected to take its Channelview OP-2 cracker in Texas down for a turnaround on 27 April.

The 873,000 tonne/year unit will be off line until 18 June, according to information in the market.

LyondellBasell has another cracker in Channelview, OP-1, with the same capacity.

Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemicals.

Buyers include Dow Chemical, Georgia Gulf, Occidental Chemical (OxyChem) and Total.

($1 = €0.70)

For more on ethylene visit ICIS chemical intelligence


By: William Lemos
+1 713 525 2653



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