US March ethylene contracts expected to drop slightly

John Dietrich

01-Apr-2015

US March ethylene contracts expected to drop slightlyHOUSTON (ICIS)–US March ethylene contracts are expected to experience a slight decline on weaker spot prices and steady cash costs, sources said on Wednesday.

Market players have said that the March monthly spot ethylene price was down around 2 cents/lb ($44/tonne) in Texas, owing to long supply and soft-to-steady demand.

Although spot prices spiked in Louisiana, buyers said this was due to mitigating circumstances and didn’t reflect a true spot market.

However, producers were likely to lobby for spot transactions in Louisiana, which carried a 20 cent/lb premium to Texas, to have some impact on the average spot price calculation for March.

With spot prices down between 1-2 cents/lb, and cracker cash costs largely steady, sources said, a drop of between 0.5-1.0 cents/lb for March contracts was most likely.

Most buyers and sellers said they expected the drop to be on the lower end of the projected range.

February contracts settled at 34.75 cents/lb, while a drop in March would put contracts at  their lowest since settling at 32.50 cents/lb in August 2009.

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

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

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

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