US spot ethylene closes week at 30-month low on improved supply

HOUSTON (ICIS)–US front-month spot ethylene closed Friday at its lowest in almost 30 months, tracking improved supply, softer demand and plunging global energy markets.

Front-month December material traded at 41.750 cents/lb ($920/tonne), its lowest since a trade at 41.625 cents/lb during the week ended 22 June 2012.

Spot prices have fallen more than 30 cents/lb since peaking in September, as global energy values have fallen enough to make overseas derivatives more competitive.

This has pushed US derivative producers to lower operating rates, especially as year-end inventory taxes are about to be assessed.

Ethylene supply in the US has also improved significantly since September, with several cracker restarts leaving the market with only one major cracker outage.

From March until October, sources said an average of 8-12% of ethylene capacity was down because of production issues.

Sources said it remains unclear where the floor for ethylene is, but said prices have not fallen as much as global energy values, so downward movement remains possible.