US July ethylene contracts set for increase on tight supply

01 August 2014 15:35  [Source: ICIS news]

US July ethylene contracts set for increase on tight supplyHOUSTON (ICIS)--US July ethylene contracts are expected to increase as tight supply has pushed up spot prices, sources said on Friday.

Buyers and sellers said that average ethylene spot prices for July have climbed by around 5 cents/lb ($110/tonne) from the June average.

This is mostly the result of unexpected tight supply stemming from several unexpected cracker shutdowns and several delayed cracker restarts.

The increase in spot material in July is expected to outweigh a drop of around 1.5 cents/lb in ethylene cash costs.

This is because feedstock prices for ethane have dropped sharply, on the ongoing cracker shutdowns.

Additionally, cracker co-product credits have been steadily rising on higher values for byproducts such as propylene and continued high benzene prices.

Sources said the two factors are expected to push US July ethylene contracts up by 1.5-2.0 cents/lb from the June settlement of 47.75 cents/lb.

US ethylene contracts typically settle at the start of the month for the  previous month.

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

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

By: John Dietrich

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