US ethylene margins drop nearly 12% after spot prices plunge

14 May 2012 15:47  [Source: ICIS news]

HOUSTON (ICIS)--US ethylene margins fell by nearly 12% in the second week of May, pressured by a sharp drop in ethylene spot prices and higher ethane costs, the ICIS margin report showed on Monday.

Ethylene margins were assessed at 43.15 cents/lb ($951/tonne, €732/tonne) in the week that ended on 11 May, down from 48.86 cents/lb  a week earlier, using ethane as a feedstock.

US margins for both ethane- and naphtha-based ethylene were at their lowest level since January 2012, according to the report.

The drop last week came after a slump in the price of spot ethylene, which traded at 53.50-61.00 cents/lb for May delivery, down from 63.00-63.25 cents/lb a week earlier.

US ethylene prices fell probably as a result of supply pressure after the restart of two US crackers in the first week of May.

But sources also said the drop was part of a correction, resulting from a disconnect in the past two months between the price of the US monomer and the resin market.

May ethylene was offered late on Friday at 56.25 cents/lb against a 53.00 cent/lb bid. No bid/offers for May were heard early on Monday.

Mont Belvieu ethane ended Friday at 46 cents/gal, recovering around 60% of its 12 cent/gal loss from the previous week.

The key US ethylene feedstock on Friday was down by 41% from 78 cents/gal in the first week of January 2012.

($1 = €0.77)

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By: William Lemos
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