Price and market trends: US ethylene contract settles down for December

11 January 2013 11:32  [Source: ICB]

US ethylene contracts dropped by 1.7% for December, market sources said on 4 January, as lower production costs last month outweighed an increase in spot prices.

 
The 0.75 cent/lb ($17/tonne, €13/tonne) reduction, the third consecutive monthly decrease, puts December ethylene at 44.50 cents/lb. The figure compares with a settlement of 54.75 cents/lb one year earlier.

The drop in December followed a reduction in production costs as a result of lower ethane prices, which averaged 23.9 cents/gal during the month, down by 18% from 29.3 cents/gal in November.

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

LOWER ETHANE DEMAND
The outages dampened demand for ethane, 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 cents/lb, up from 50.750-51.375 cents/lb in the last week of November.

The monomer traded several times the week ended 4 January above 59.50 cents/lb for January delivery and at 60 cents/lb for delivery in February.

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, both of which are scheduled to start in early January.

The shutdown at Westlake, includes an expansion that will raise capacity at the unit by 230m-240m lb/year (104,000-109,000 tonnes/year). Two other expansions, combined with the restart of a 380,000 tonne/year Dow Chemical cracker in Louisiana at the end of December, could bring nearly 2bn lb/year of new capacity to the US industry this year.


By: William Lemos
+1 713 525 2653



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