02 August 2011 17:57 [Source: ICIS news]
HOUSTON (ICIS)--US ethylene contracts for July settled flat with June after higher production costs last month were offset by a drop in spot prices, market sources said on Tuesday.
US ethylene contracts usually settle at the beginning of the month for the previous month.
The rollover in July, which kept the contract at 56.75 cents/lb ($1,251/tonne, €876/tonne), was reached despite a rebound in spot prices in the second half of the month.
Ethylene for July traded at 62.00-63.50 cents/lb in the week ended 29 July, up from 59.50-61.50 cents/lb a week earlier, while August material traded at 62.00-63.50 cents/lb, up from 59.00-61.00 cents/lb in the previous week.
Ethylene began July trading at 56.250-57.750 cents/lb.
Spot prices rose in response to recent production issues with at least two Texas crackers and the likelihood of tighter supply in the coming months as a result of scheduled cracker maintenance.
Among the shutdowns is Formosa's Point Comfort cracker 2 in Texas, which will go down on 1 September for 35-40 days. The unit has 816,000 tonnes/year of ethylene capacity.
At least three other US producers are expected to carry out maintenance in September and October, but were not disclosing the information publicly.
According to sources, ExxonMobil will shut down its 1m tonne/year Baton Rouge cracker in Louisiana on 1 September for a 45-day turnaround.
Shell will follow with a shutdown at its Deer Park cracker in Texas on 1 October for 45 days. The company has 835,000 tonnes/year of capacity at the site.
Next is Dow Chemical's 610,000 tonne/year St Charles cracker in Louisiana, which will go down on 10 October for 30 days.
ExxonMobil is also said to be planning a 45-day turnaround at its 1.2m tonne/year Baytown cracker in Texas, but the unit is not expected to go down until 1 January 2012.
An ExxonMobil spokesperson could not confirm the information on the turnarounds.
Dow and Shell did not respond to requests for comment. Formosa confirmed it plans to begin the turnaround in Point Comfort on 1 September.
Major US ethylene buyers include Dow Chemical, Georgia Gulf, Occidental Chemical (OxyChem) and Total.
Producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemicals.
($1 = €0.70)
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