US plant blast should affect spot ethylene market, PVC margins: firm

14 June 2013 21:42  [Source: ICIS news]

HOUSTON (ICIS)--The Williams plant explosion in Geismar, Louisiana, should cause the ethylene spot market to spike upward but then fall, an investment analyst firm said on Friday.

While most firms produce ethylene captively to make other chemicals, Williams produces ethylene for sale to other companies, and thus prices on the relatively small US ethylene spot market should move much higher, UBS said in a research note.

Currently, US spot ethylene prices are up more than 10% to 59-60 cents/lb ($1,301-1,323/tonne, €976-992/tonne) from 53.5 cents/lb earlier in the week, as assessed by ICIS.

Ethylene will be rationalised locally until backup supplies are arranged, UBS said.

The analyst firm pointed to Axiall and Westlake Chemical’s polyvinyl chloride (PVC) businesses as possible beneficiaries of the outage at the Williams plant with modestly higher margins. Overseas competitors could also benefit, UBS said.

Overall, UBS believes that the ethylene market will readjust within a few months due to plenty of excess capacity globally.

($1 = €0.75)

By: Jeremy Pafford
+1 713 525 2653

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