20 May 2013 22:46 [Source: ICIS news]
HOUSTON (ICIS)--US spot ethylene prices for front-month material solidified their slide from the previous week’s mid-week run-up on Monday.
US May ethylene traded at 58.25 cents/lb ($1,284/tonne, €1,002/tonne) on Monday, in-line with the closing deal of the previous week at 58.00 cents/lb.
The two most recent spot trades came after prices reached a high of 62.375 cents/lb on 15 May.
The run-up on 15 May also saw two trades at 62 cents/lb on news of several unplanned cracker outages, a jump of 2-3 cents/lb from the previous spot deals.
However, the run-up was immediately slowed with the trade at 58 cents/lb on 16 May.
Market sources said the run-up appeared overdone and was based on speculation that the cracker shutdowns would severely tighten supply.
As a result, speculators drove up the prices, hoping to sell off material to end users who were short on material, sources said.
This meant there were no end-use buyers willing to pay premiums for material, even if supply was tight.
“I don’t think there are long-term fundamentals to support the higher levels,” a trader said. “But it’s hard to know where we’re going.”
There was some concern that the trade of 58 cents/lb would be an aberration, as no deals were done on 17 May, but bid/offer levels hovered around 58-60 cents/lb, well below the mid-week trio of deals.
With Monday’s deal at 58.25 cents/lb, market players feel the most recent deals are a better reflection of where prices are.
“The 58 cents/lb level is where we are pegging the May market,” a producer said. “June is down to 60 cents/lb.”
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 = €0.78)
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