HOUSTON (ICIS)--US December ethylene contracts reached a full settlement up 4.3%, sources confirmed on Friday.
The 2.00 cent/lb ($44/tonne) increase puts December contracts at 48.25 cents/lb, which also put them 8.4% higher year on year from the 44.50 cent/lb settlement in December 2012.
Ethylene contract prices moved up largely on the back of rising spot prices, which climbed to an average of 55-56 cents/lb from 52-53 cents/lb in November.
That rise was supported by higher demand, especially on the benchmark Williams System.
The Williams System had been oversupplied for much of the third and fourth quarters because of the ongoing issues with the Evangeline Pipeline.
Initial estimates called for the pipeline to be restored to full rates in December, allowing buyers who had been limited to purchase more.
However, the pipeline remains below full rates, and is not expected to be restored until March.
Spot ethylene was also buoyed by expectations of tight supply at the start of 2014 as the US cracker turnaround season began.
Ethylene production costs also moved up, as feedstock ethane reached a six-month high, although this was partially offset by higher co-product credits.
US ethylene contracts are typically settled at the start of the month for the previous month.
Major US producers include Chevron Phillips, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major buyers include Axiall, Dow Chemical, Occidental Chemical and Total.