US ethylene margins up at highest level since September 2011

17 January 2012 22:15  [Source: ICIS news]

HOUSTON (ICIS)--US ethylene margins rose again in the second week of January, jumping to their highest level in the last four months on the back of rising ethylene prices and lower production costs, the ICIS margin report showed on Tuesday.

Ethylene margins rose to 35.43 cents/lb ($781/tonne, €617/tonne) in the week that ended on 13 January, up by 33% from 26.65 cents/lb a week earlier using ethane as a feedstock.

The increase, which followed at 24% gain in the previous week, followed a drop in feedstock ethane costs and a 6% increase in ethylene spot prices.

US ethylene for January traded last week at 59.000-61.750 cents/lb, rising from deals done at 56.750-57.500 cents/lb a week earlier.

Market sources continued to point to a series of upcoming cracker shutdowns in the US as being chiefly responsible for lifting ethylene prices.

Around 10% of US ethylene capacity will be off line in the second quarter, according to a projection in the market.

The cracker shutdowns were also cited as a factor pressuring the price of ethane, the key US ethylene feedstock that ended on Friday at 69 cents/gal, down by 12% from 78 cents/gal a week earlier.

A "crack" in ethane pricing is imminent particularly in light of the heavy US cracker turnaround schedule in 2012, an analyst said, also alluding to a combination of incremental ethane capacity coupled with pipeline bottlenecks easing.

Mont Belvieu ethane prices were assessed slightly lower on Tuesday at 68-69 cents/gal.

Meanwhile, ethylene for January delivery was offered at 59.50 cents/lb against a 56.00 cent/lb bid.

($1 = €0.79)

For more on ethylene visit ICIS chemical intelligence

By: William Lemos
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