US spot ethylene rebounds from 50-week low on higher demand

John Dietrich

19-Dec-2014

US spot ethylene rebounds from 50 week low on higher demandHOUSTON (ICIS)–US front-month spot ethylene prices rebounded from a 50-month low to close the week on an uptrend, sources said on Friday.

To close the week, front-month December ethylene’s most recent trade was at 43.00 cents/lb ($948/tonne), up from the low trade of the week at 38.25 cents/lb.

Much of the rally was the result of the restart of the Evangeline Pipeline, which allowed excess product in Texas to move into Louisiana.

Sources said buyers in Louisiana were able to restore some inventory losses stemming from the pipeline shutdown in October, as well as the ongoing shutdown of Williams Olefins’ Geismar cracker in Louisiana.

The cracker is still slated to be restarted in December, sources said, and should supply Louisiana with enough ethylene to keep the region balanced.

Sources said they expect that after the restart, Louisiana ethylene will carry a 1.0-1.5 cent/lb premium to Texas ethylene, based on pipeline fees.

Additionally, ethylene hitting a 50-month low represented a buying opportunity for some, sources said, helping spark some of the rebound in prices.

Most market players said they expect ethylene to return to a downward trajectory for most of the rest of the year, due to plunging global energy values and weak demand for US ethylene derivatives in the global spot market.

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