US November ethylene facing rollover or slight increase

03 December 2013 15:48  [Source: ICIS news]

HOUSTON (ICIS)--US November ethylene contracts are set for a rollover or slight increase, sources said on Tuesday, despite a surge in spot prices during the month.

The US November spot ethylene average was 52-53 cents/lb ($1,146-1,168/tonne, €848-864/tonne), up from the October average of 45-46 cents/lb.

Coupled with a cash cost decline of about 1 cent/lb, this would lead formula-based talks toward a 3 cent/lb increase in November contracts.

However, sources said they expect November ethylene to settle up 1 cent/lb or roll over.

“They only gave up 1 cent/lb in October when they should have given up 3 cents/lb,” a source said. “So they can really only get 1 cent/lb back this month.”

October ethylene contracts settled at 45 cents/lb, down from the September settlement of 46 cents/lb.

Sources said a rollover would be based on weaker demand from end-of-the-year inventory drawdowns in the polyethylene (PE) and polyvinyl chloride (PVC) markets.

Additionally, operating rates at US crackers remain strong, keeping supply balanced to slightly long.

There is also talk that plants are running strong to build up inventories for the upcoming cracker turnaround season in the spring of 2014.

Typically, US ethylene contracts settle at the start of a month for the previous month.

Major US ethylene producers include Chevron Phillips, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.

Major buyers include Axiall, Dow Chemical, Occidental Chemical and Total.

($1 = €0.74)

By: John Dietrich

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