US spot ethylene’s rise in December puzzles market

04 December 2013 23:11  [Source: ICIS news]

HOUSTON (ICIS)--US spot ethylene prices are up by 5.6% week on week, sources said on Wednesday, yet reasons for the movement have largely eluded the market.

“I have no idea what is fuelling these higher prices,” a source said. “There doesn’t seem to be a reason to go up.”

Front-month ethylene for December traded at 57 cents/lb ($1,257/tonne, €930/tonne) on Wednesday, its fifth trade done higher this week than the previous week’s two trades at 54 cents/lb.

The increase comes despite sources saying demand is weak because of seasonal factors in the downstream polyethylene (PE) and polyvinyl chloride (PVC) markets.

Most market players were expecting ethylene to come down in December, as production levels have been strong and supply is balanced.

Spot ethylene had steadied for two consecutive weeks after surging since mid-October on bargain buying.

There is talk that with the cracker turnaround season expected to start in the spring of 2014 that some of the higher trading could be consumers pre-buying to get ahead of higher prices or traders looking to build inventories for profit-taking in early 2014.

The trades during the current week have put the average price at 55.10 cents/lb, up by 6.7% year on year from 51.63 cents/lb for the week ended 7 December 2012.

($1 = €0.74)

By: John Dietrich

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