01 May 2013 16:59 [Source: ICIS news]
HOUSTON (ICIS)--US April ethylene contracts appeared set for a decline, tracking weaker spot prices during the month, sources said on Wednesday.
Early projections peg April contracts falling by 1.0-1.5 cents/lb ($22-33/tonne, €17-25/tonne), based on a roughly 7% fall in the average April spot ethylene price.
March US ethylene contracts settled at 48 cents/lb, the third month in a row at that price.
April spot ethylene was mostly weaker during the month because of long supply and soft demand from the polyethylene (PE) market, sources said.
“Demand probably won’t really start picking up until June or July,” an ethylene buyer said. “Prices should go up then too.”
Sources said that despite the softer prices and weaker margins on ethylene, business is still strong.
“People are still making money on olefins,” the source said. “It’s a very profitable time.”
Supply was on the longer side as steam cracker operating rates were in the low-90% level for most of the month.
The expected decline in April ethylene contracts is slightly mitigated by higher production costs as well as some improvement in demand from the polyvinyl chloride (PVC) market.
US ethane in April increased by about 5% during the month.
Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major buyers include Axiall, Dow Chemical, Occidental Chemical and Total.
($1 = €0.76)
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