06 January 2014 19:57 [Source: ICIS news]
HOUSTON (ICIS)--US December ethylene contracts are expected to increase on higher spot prices and production costs, sources said on Monday.
Most are expecting an increase of 2.00-3.00 cents/lb ($44-66/tonne, €33-49/tonne) from the November settlement of 46.25 cents/lb.
Most of the contract increase stems from stronger spot prices seen in December, based largely on expectations of tight supply and steady demand.
US spot ethylene prices averaged 55-56 cents/lb in December on the benchmark Williams System, up from the November average of 52-53 cents/lb.
Spot prices had been slightly depressed on the Williams System because material was long, owing to a pipeline shutdown that limited the ability of producers to move material to preferred destinations.
However, the Williams System moved more into alignment with other ethylene delivery systems, although the pipeline’s return was delayed, sources said.
Market players expect ethylene to tighten in the first quarter as the US cracker turnaround season starts.
Ethylene production costs also rose in December as key feedstock ethane prices hit six-month highs.
US ethylene contracts are typically settled early in the 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)
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