US ethylene margins shed 13% on lower spot prices

21 May 2012 18:28  [Source: ICIS news]

HOUSTON (ICIS)--US ethylene margins shed 13% last week on continued pressure from lower ethylene spot prices, the ICIS margin report showed on Monday.

Ethylene margins were assessed at 37.42 cents/lb ($825/tonne, €644/tonne) in the week that ended on 18 May, down from 43.15 cents/lb a week earlier, using ethane as a feedstock.

The drop last week came after a similar reduction a week earlier. The decline in spot prices in May has pushed US margins to their lowest level since mid-January, according to the report.

US spot ethylene for May delivery traded last week at 51.75 cents/lb, down from deals done at 63.00 cents/lb at the beginning of the month.

Market sources said the downturn in ethylene stems from pressure from lower ethane costs in May and increasing supply, as two US crackers returned from planned turnarounds early in the month.

The drop in May has put US ethylene spot prices below contracts for the first time in 2012, a reduction that has market sources predicting the monthly contract will fall by 5-7 cents/lb this month.

The US contract is now priced at 55.25 cents/lb based on the April settlement. US ethylene normally settles at the beginning of the month for the preceding month.

Ethylene for May was bid on Monday at 50.25 cents/lb. No offers were heard.

Mont Belvieu ethane, which ended Friday at 42 cents/gal, traded up to 43.50-44.50 cents/gal on Monday in tandem with higher energy prices.

($1 = €0.78)

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By: William Lemos
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