06 July 2011 16:27 [Source: ICIS news]
HOUSTON (ICIS)--US ethylene contracts for June fell by 1.75 cents/lb ($39/tonne, €27/tonne), snapping a four-month uptrend on pressure from lower spot prices last month, market sources said on Wednesday.
The 3% drop, which put the monthly contract at 56.75 cents/lb, was confirmed by producers and buyers.
Market sources cited a reduction in spot prices last month as paving the way for the contract drop.
Ethylene began June trading at around 65 cents/lb, but spot prices plummeted by 16% in the second half of the month on weaker demand from the key polyethylene (PE) market.
The drop resulted in an average 4-cent/lb spot price reduction for the month, which more than offset a small increase in production costs in June, one source said.
US ethylene contracts usually settle at the beginning of the month for the previous calendar month.
The contract reduction in June was the first for US ethylene since the monomer settled down by 3.25 cents/lb in January on pressure from lower spot prices and production costs that 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.
($1 = €0.69)
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