30 May 2013 17:41 [Source: ICIS news]
HOUSTON (ICIS)--US ethylene buyers and sellers remain divided regarding contract settlements as the market begins negotiations for a double-month settlement, sources said on Thursday.
The US April ethylene contract was not settled, and market players expect a double-month settlement for April and May to be reached in early June.
Market players said US exports of PE and PVC have struggled in recent months, owing to the high price of the material.
“A lot of the buying, when it’s close to the polyethylene, there’s no conversion room, even for exports,” a buyer said. “It’s very strange.”
However, margins for ethylene have been robust throughout 2013. Margins have been above 50 cents/lb ($1,102.3/tonne, €849/tonne) for all but three weeks in 2013, according to the ICIS margin report.
The PE and PVC producers said that those strong margins, which stem from cheap feedstock ethane, need to be shared with downstream markets.
Ethylene producers said that contract prices, which have been at 48 cents/lb for all of 2013, are too low.
Producers said that spot prices, which have averaged roughly 61 cents/lb in 2013, showed that the market has room to absorb higher prices.
Buyers countered that spot deals often represent other producers looking to cover themselves after unplanned cracker shutdowns or buyers who are also looking for cover.
Typically, the US ethylene contract is settled at the start of a month for the previous 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 = €0.77)
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