US ethylene average spot margins climb by 60% in 2012

07 January 2013 18:43  [Source: ICIS news]

HOUSTON (ICIS)--US ethylene spot margins were on average 60% higher in 2012, the ICIS margin report showed on Monday, rising on a combination of lower feedstock costs and increased ethylene prices.

Ethylene margins averaged 43.95 cents/lb ($969/tonne, €736/tonne) in 2012, using ethane as a feedstock, up from 27.47 cents/lb in 2011, the report showed.

Average margins for ethane-based ethylene in 2012, which rose by 45% from 2011, were the highest since ICIS began tracking margins in 2000.

The uptrend has carried into 2013 as margins climbed by 6% in the first week of January to 52.96 cent/lb on firm ethylene spot prices and relatively low ethane prices.

Ethane prices softened in the past few weeks on continued supply pressure and weaker demand as at least five US crackers experienced unscheduled shutdowns in December.

The outages dampened demand for the feedstock, while causing a significant run-up in the price of spot ethylene at a time when prices were expected to fall.

Ethylene for prompt delivery ended December trading at around 60.00 cents/lb, up from 50.750-51.375 cents/lb in the last week of November.

The monomer traded several times last week above 59.50 cents/lb for January delivery and at 60.00 cents/lb for delivery in February. First-quarter ethylene was transacted at least three times at 59.50 cents/lb.

Ethylene for January was bid on Monday at 60.00 cents/lb with no offers.

Spot ethylene may hold onto its gains at least for the short term, as the US has two olefins plants with scheduled maintenance in January.

Among the expected outages are a 45-day stoppage at Huntsman’s 193,000 tonne/year Port Neches unit in Texas and a 50-day turnaround at Westlake’s 699,000 tonne/year Petro 2 cracker in Louisiana.

($1 = €0.76)

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By: William Lemos
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