US ethylene margins up 5% on lower ethane prices

23 January 2012 17:30  [Source: ICIS news]

A US crackerHOUSTON (ICIS)--US ethylene margins rose by 5% in the third week of January after a drop in ethane prices outweighed a small reduction in ethylene spot prices, the ICIS margin report showed on Monday.

Ethylene margins rose to 37.17 cents/lb ($819/tonne, €639/tonne), using ethane as a feedstock, up from 35.43 cents/lb in the week ended 13 January.

The increase, which kept margins at their highest level since September 2011, followed a 17% reduction in feedstock ethane prices last week.

Mont Belvieu ethane ended Friday at 57 cent/gal, down from 69 cents/gal a week earlier. The feedstock has averaged 67.7 cents/gal so far in January, down from 80.6 cents/gal in December.

Ethane prices have softened because of a weakening demand outlook in light of a busy 2012 cracker turnaround season in the US.

Two US crackers are down for planned maintenance, while another six units are scheduled to go off line in the next few months.

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

US ethylene for January was bid at 59.25 cents/lb on Monday against a 63.00 cents/lb offer. The monomer traded at 59.000-60.500 cents/lb last week, down from 59.875-61.750 cents/lb a week earlier.

Mont Belvieu ethane prices were up on Monday, but market activity was thin. A deal for January delivery was heard at 62.75 cents/gal.

($1 = €0.78)

For more on ethylene visit ICIS chemical intelligence

By: William Lemos
+1 713 525 2653

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