US ethylene margins fall to four-month low on soft spot prices

HOUSTON (ICIS)–US ethylene margins fell 1.2% for the week ended 21 February, the ICIS margin report showed on Monday, hitting a four-month low.

Margins for ethane-based spot ethylene fell to 36.85 cents/lb ($812/tonne) for the week ended 21 February, down from 37.31 cents/lb the previous week.

The fall in ethylene margins put them at their lowest since they were at 36.57 cents/lb for the week ended 11 October 2013.

Although ethylene spot prices rose an average of 0.25 cent/lb, they still remained near their lowest levels since November 2013.

Much of the weakness in spot prices is being driven by long supply because of high inventories, as well as softer demand because of several downstream plant issues.

The biggest factor driving down ethylene margins was an increase in feedstock ethane, which jumped to 17.91 cents/lb from 17.29 cents/lb.

This puts ethane prices at their highest since mid-May 2012, according to the report.

Ethane cracker co-product credits also fell, dropping to 4.01 cents/lb from 4.11 cents/lb, further eroding ethylene margins.

US ethylene for February was heard bid at 50.75 cents/lb on Monday against offers at 54.00 cents/lb.