17 May 2012 22:23 [Source: ICIS news]
HOUSTON (ICIS)--US ethylene for May traded at 51.75 cents/lb ($1,141/tonne, €901/tonne) on Thursday, down by 18% since the start of the month, a reduction that puts spot prices in May below contracts for first time in 2012.
US ethylene contracts are now priced at 55.25 cents/lb based on the April settlement, as the US monomer normally settles at the beginning of the month for the preceding month.
The last time US ethylene spot prices were priced below contracts was in the third week of December 2011, according to the ICIS database.
Ethylene for December delivery traded that week at 51.50-52.00 cents/lb, while the November contract was priced at 55.00 cents/lb.
The run-up in spot prices in recent months was fueled by supply tightness amid a busy cracker turnaround season in the US, which culminated with spot ethylene trading at a record 76.125 cents/lb in mid-April.
A total of nine US crackers were taken off line for planned turnarounds between January and April, while 12 units experienced downtime as a result of unplanned outages.
Ethylene spot price began to lose steam at the end of April, dropping sharply in the first week of May, on pressure from lower ethane costs and increasing supply, as two US crackers resumed production after planned turnarounds.
The outlook for May points to a large reduction for the US ethylene contract even though three crackers in Texas are still off line for planned maintenance.
The contract in May will drop by 7 cents/lb, one market participant predicted.
Ethylene spot prices for June delivery were slightly below the front month.\
Ethylene for June traded on Thursday at 51.25 cents/lb, while material for third-quarter delivery traded at 50 cents/lb and December ethylene was transacted at 46 cents/lb, market sources said.
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