US Sept ethylene increases on tight supply

07 October 2016 22:12 Source:ICIS News

HOUSTON (ICIS)--US ethylene contracts for September were assessed at an increase of 2.75 cents/lb amid continued tightness in supply, although the settlement was not agreed to be market-wide.

Several sellers and buyers confirmed on Tuesday that they had settled September ethylene contracts at 35.75 cents/lb ($788/tonne), up from the August price of 33.00 cents/lb.

However, one producer is no longer participating in the monthly settlement process. On the buy side, a couple of sources said they are not settling contracts for September. Nevertheless, many market participants have considered September contracts as fully settled.

September marks the second consecutive month of increases, and contract prices have risen by 44% since bottoming out at 24.75 cents/lb for January. The September settlement puts contracts at their highest level since settling at 38.25 cents/lb for December 2014.

US Sep ethylene contracts increase on tight supply

The September increase was mostly a result of the recent surge in spot prices amid continued tightness in supply.

Availability has been limited because of a heavy cracker maintenance schedule this year, and two more units shut down in mid-September for planned turnarounds.

Additionally, the restart of another cracker – which has been off line since mid-July for a turnaround and expansion project – has been further delayed until the end of October.

This led front-month spot ethylene to trade in September at 35.00-42.00, up from 30.75-39.50 cents/lb in August.

Additionally, sources said that cash costs rose by about 0.1 cent/lb month on month.

Overall feedstock costs for ethane, propane and butane were higher in September from August.

Cracker co-product credits also rose, with higher September contract settlements for propylene, butadiene (BD) and benzene.

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

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

Major US buyers include Occidental Chemical, Total and Westlake Chemical.

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By Tracy Dang