AFPM '12: EG production rates likely to drop on high ethylene

01 April 2012 18:47  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--US ethylene glycol (EG) producers will reduce production rates in the coming weeks if feedstock ethylene values remain high, market participants said on Sunday.

With ethylene values in the high 60s cents/lb and the spot price spike seen on Friday, EG producers’ margins remain slim, market players said on the sidelines of the International Petrochemical Conference (IPC).

US ethylene for April traded sharply higher on Friday amid talk of outages at two crackers. April ethylene traded at 75.00 cents/lb ($1,654/tonne, €1,241/tonne), up from a deal done at 69.50 cents/lb the previous day.

“Ethylene at 75 cents/lb is not sustainable,” an EG market  source said. “Even ethylene at 68 cents/lb is ridiculous.”

The surge came amid talk that Williams and ExxonMobil were having a disruption at their crackers in Louisiana.

Williams has a 612,000 tonne/year cracker in Geismar, while ExxonMobil has a 1m tonne/year unit in Baton Rouge.

A Williams spokesperson could not immediately confirm a shutdown, while a recording on ExxonMobil's hotline in Baton Rouge referred to a "planned unit shutdown" for routine maintenance.

The recording said the unit was taken off line on 29 March. The message said that flaring was expected when the unit restarted in a few weeks.

If implemented, the production slowdown is expected to last through June when ethylene turnarounds are completed and which is when downstream polyester fibre demand should be back on track, buyers said. 

Up to 12% of USG cracker capacity will be down in the second quarter because of spring maintenance turnarounds, according to sources.

Industrial-grade ethylene glycol (EGI) was assessed at 52-55 cents/lb for March contract pricing, according to ICIS.

Major EG producers in the US include LyondellBasell, Huntsman, MEGlobal, Old World, SABIC and Shell.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC continues through Tuesday.

($1 = €0.75)

By: Leela Landress
+1 713 525 2653

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