Deutsche Bank predicts short-term decline for US ethylene margins

07 June 2013 17:23  [Source: ICIS news]

Deutsche Bank predicts short-term decline for US ethylene marginsHOUSTON (ICIS)--US ethylene margins should be strong in the long term, but 2013 margins may have reached their peak, German-based Deutsche Bank said on Friday.

The bank said that 2013 ethylene margins have likely hit their highest unless a strong global economic recovery occurs.

According to its projections, US ethylene margins are expected to fall to the 25 cents/lb ($551/tonne; €419/tonne) level in the second half of 2013.

The fall will mostly be spurred by lower spot ethylene prices because of softer demand from the polyethylene (PE) and polyvinyl chloride (PVC) markets, the bank said.

US ethylene margins have been in the 45-50 cents/lb level in the past four weeks, as assessed by ICIS.

The bank said that its projections for strong long-term ethylene margins are based on expected long supply and steady demand in the feedstock ethane market.

This balance favouring ethylene producers is expected to last through 2016 at the least, the bank said.

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)

By: John Dietrich

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