US ethylene margins rise 10% as spot prices soar

04 April 2011 21:12  [Source: ICIS news]

HOUSTON (ICIS)--US ethylene margins surged by nearly 10% in the last week of March, lifted mostly by continued gains in the price of spot ethylene, the ICIS margin report showed on Monday.

Ethylene spot margins were at 31.80 cents/lb ($701/tonne, €491/tonne) last week, up from 28.94 cents/lb in the week ended 25 March, using ethane as a feedstock.

US spot ethylene for April traded last week at 60.625-62.375 cents/lb, rising from deals done at 58.500-60.625 cents/lb a week earlier.

The increase last week extended an uptrend that began in mid-January, when ethylene spot prices began to rise on firm demand, constrained supply and higher feedstock prices.

The monomer has gained nearly 47% since trading at 41.50-42.25 cents/lb in the week ended 14 January.

Ethylene spot prices rose last week on continued firm demand, but sources also cited cracker turnarounds and a recent allocation announced by Shell as factors lending additional support for the monomer.

Shell will limit deliveries of ethylene to 90% in April, sources said, adding that the restriction stemmed from problems the company had accessing storage wells in Mont Belvieu, Texas, following the fire at the Enterprise Products facility in 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, one US cracker went down last week for planned maintenance, after Chevron Phillips Chemical began a turnaround at its Sweeny 24 unit in Texas.

The 676,000 tonne/year cracker will be off line until the end of April, sources said.

The US has at least one more cracker in Texas with scheduled maintenance this month, as LyondellBasell is expected to take its Channelview OP-2 unit down on 27 April.

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

US ethylene prices continued to move up on Monday. The monomer was bid at 63 cents/lb against an offer at 64 cents/lb.

Mont Belvieu ethane prices inched up to 73.625-75.000 cents/gal on Monday from 73.000 cents/gal on Friday, but trading was thin because several market players were out attending an industry conference in Texas.

For more on ethylene visit ICIS chemical intelligence

By: William Lemos
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