03 June 2011 20:16 [Source: ICIS news]
HOUSTON (ICIS)--US ethylene contracts for May were mostly settled at 58.50 cents/lb ($1,290/tonne, €890/tonne) on Friday, rising by 1.25 cents/lb from April as a result of higher spot prices last month.
The increase was confirmed by a buyer and a producer, but sources said a full-market settlement was yet to be reached.
The 2.2% increase was widely expected and followed higher spot prices in May, which sources said more than offset a drop in production costs last month.
US ethylene spot prices rose on average by around 4.50 cents/lb in May, while production costs dropped by about 2.00 cents/lb, market sources said.
Ethylene contract prices have risen by nearly 30% since settling at 45.25 cents/lb in January.
The increase in May was the fourth in as many months for the US monomer.
This months-long uptrend stems from constrained supply and higher production costs.
US ethylene contracts usually settle at the beginning of the month for the previous calendar month.
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.
In the spot market, ethylene prices were mostly steady this week, but the market remained backwardated with material for July and the third-quarter trading at a 2% discount compared with the front month.
Ethylene for June traded at 64.50 cents/lb on Friday, on the high end of deals done at 63.00-65.50 cents/lb a week earlier.
July ethylene traded at 64 cents/lb this week, while material for third-quarter delivery was transacted at 63 cents/lb.
($1 = €0.69)
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