US ethylene spot market ends week on slight downturn

23 August 2013 21:47  [Source: ICIS news]

HOUSTON (ICIS)--US front-month and forward-month ethylene prices ended on Friday slightly lower and also moved closer to parity.

Sources said US ethylene for August, the front month, traded three times at 54.5 cents/lb ($1,202/tonne, €902/tonne), its lowest level of the week.

The trades were down from a trade on Thursday at 54.75 cents/lb and the weekly high of 56.00 cents/lb, done on Wednesday.

Sources were unsure why prices were falling, but several theories emerged.

Some said that the recent spate of cracker outages and production issues had seen information regarding start-ups hitting the market, leading to an easing of concerns about tight supply.

Sources said that Williams Olefins, Westlake Chemical, LyondellBasell and ExxonMobil all experienced a cracker outage or continued to have a cracker down during the week.

Other market players said that downstream polyethylene (PE) buyers have been building inventories in an effort to retreat from the market in the face of high PE prices.

This has led to a decrease in demand and buying interest and has forced sellers to lower prices slightly.

The supply concerns and expected stronger demand in September because of a build-up for the US winter holidays has kept forward-month ethylene in backwardation for the past two weeks.

However, that gap narrowed on Friday as September ethylene traded twice at 55.625 cents/lb, putting its premium to August material at 1.125 cents/lb.

Forward-month ethylene was at a premium of 1.25 cents/lb the previous day and Tuesday and was 1.50.-1.75 cents/lb higher to close the previous week.

With September soon to take over as the front-month and concerns about demand, prices were pushed lower on Friday, sources said.

There is also some speculation that September prices are stronger, owing to expectations that the US hurricane season will cause unplanned cracker outages.

($1 = €0.75)


By: John Dietrich
713-525-2600



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