US Dec ethylene falls 7.25 cents/lb, settles at 53-month low

John Dietrich

05-Jan-2015

US Dec ethylene falls 7.25 cents/lb, settles at 53 month lowHOUSTON (ICIS)–US December ethylene contracts fully settled at a 53-month low, sources confirmed on Monday, tracking plunging spot values and falling production costs.

Sources confirmed the December settlement at 38.25 cents/lb ($843/tonne), down by 7.25 cents/lb from 45.50 cents/lb for November.

The drop puts contracts at their lowest since settling at 37 cents/lb for the month of July 2010.

Sources had expected a decline of this level, as spot ethylene prices in December fell an average of 10-11 cents/lb, while cash costs fell 3-4 cents/lb.

The drop in spot prices was largely fuelled by declining global energy markets, which made overseas derivatives more competitive and forced US sellers to lower prices.

This led to less demand for ethylene, which pushed the market longer, especially as several cracker restarts in the fourth quarter boosted supply.

Cracker cash costs have also been falling on the drop in energy futures, especially for feedstocks propane and butane.

US ethylene contracts settle at the start of the month for the previous month.

Major US ethylene producers include Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell and Shell Chemical.

Major US buyers include Axiall, Dow Chemical, Occidental Chemical and Total.

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