US front-month spot ethylene rises, trades at new 28-month high

Focus story by John Dietrich

HOUSTON (ICIS)–US front-month spot ethylene hit a 28-month high for the second day in a row on Thursday on continued tight supply and buying activity before the close of the month.

Sources said August spot ethylene traded at 72.500 cents/lb ($1,598/tonne) on Thursday, its highest since a trade at 76.125 cents/lb during the week ended 13 April 2012.

On Wednesday, spot ethylene broke the 70 cent/lb barrier for the first time since the week ended 27 April 2012.

Spot supply has been limited because of continued outages at two major crackers, as well as low inventories caused by production issues in the second and third quarters.

Williams Olefins’ said that its Geismar cracker in Lousiana would remain shut down until at least October, and was set to restart between then and the end of the year.

Sources added that Chevron Phillips Chemical is not expected to be up at its Port Arthur cracker in Texas until November.

Additionally, Dow Chemical reported flaring at its No. 8 Freeport cracker in Texas on Thursday, leading to aggressive buying.

Spot ethylene for September was done at 69.50 cents/lb on Thursday, and material for October was done at 69.25 cents/lb.

The high prices have also been aided by improvements in demand from the polymers sectors, which are starting to peak on seasonal factors.

However, continued high ethylene prices could lead to more demand destruction, and have already pushed two major consumers to shut down their units until high prices pass.