US Aug ethylene contracts mostly settle down 9.9%

HOUSTON (ICIS)–US August ethylene contracts were mostly settled down 9.9% on Wednesday on weak spot prices.

Sources said the drop of 3.25 cents/lb ($72/tonne) puts August contracts at 29.50 cents/lb.

Sources said one large buyer did not agree to the settlement and was holding out for a steeper decline.

The settlement puts contracts at their lowest since December 2008, when they settled at 28.5 cents/lb.

Sources said that spot prices in August fell between 7.0-7.5 cents/lb from July, pushing them to their lowest in more than six years.

Cracker cash costs, however, were up less than 1 cent/lb despite cheap feedstock costs, mostly on weaker values for co-product credits such as propylene and aromatics.

The fall in August ethylene contracts still keeps contract prices above the spot market, which is atypical and is expected to lead to high volumes of spot transactions in September.

US ethylene contracts typically settle near 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, Dow Chemical, Occidental Chemical and Total.