US ethylene contracts reach initial triple-month settlement

02 July 2013 22:24  [Source: ICIS news]

US ethylene contracts reach initial triple-month settlementHOUSTON (ICIS)--US ethylene contracts have reached an initial triple-month settlement, sources said on Tuesday.

US April ethylene was settled at 47.25 cents/lb ($1,042/tonne, €802/tonne), May ethylene at 46.25 cents/lb and June ethylene at 45.50 cents/lb, sources confirmed.

The settlement puts ethylene contracts 2.5 cents/lb lower than the previous settlement, which was completed in March at 48 cents/lb.

Sources said much of the disagreement from the settlement stemmed from producers’ efforts to narrow the contract-spot gap.

US spot ethylene fell from the 63-64 cents/lb level to the 56-57 cents/lb during that time, tracking improved supply and steady to soft demand.

Buyers said that pricing contract ethylene on a spot basis would severely erode margins for non-integrated producers, especially in the polyethylene (PE) and polyvinyl chloride (PVC) markets.

It would also make exporting most ethylene derivatives more difficult, sources said.

The triple-month settlement, which appears likely, would be the first for the ethylene market since July, August and September of 2009.

US ethylene contracts typically settle 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)

By: John Dietrich

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