HOUSTON (ICIS)--US ethylene contracts for August and September have settled at increases of 2 cents/lb and 4 cents/lb, respectively, following market disruptions from Hurricane Harvey, market sources said on Tuesday.
The increases put the September contract price at 35.25 cents/lb ($777/tonne) and the August contract price at 31.25 cents/lb, up from 29.25 cents/lb in July.
August ethylene negotiations began in early September in the immediate aftermath of Harvey, but were delayed due to disruptions and uncertainty in the market.
The hurricane landed on the Texas coast near Corpus Christi on 25 August and remained in the region for several days, causing historic flooding in the Houston area and near the Texas-Louisiana border.
Multiple ethylene units were shut down due to the storm. While many began restarting by early September, some units remained offline and there was some uncertainty about how long outages would continue.
Most units restarted through September. However, several remain offline, including units at the Shell Chemical complex in Deer Park, the LyondellBasell complex in LaPorte and the Chevron Phillips Chemical (CP Chem) complex in Cedar Bayou.
Amid the disruptions, ethylene spot prices climbed through most of September. Ethylene demand had been good despite downstream Harvey-related outages, market sources had said, due to high operating rates for derivative plants which were online.
Additionally, two polyethylene (PE) projects had started-up during September.
A CP Chem PE project in Old Ocean, Texas, started up ahead of its planned cracker, which is expected to start up in early 2018.
A DowDuPont PE project in Freeport, Texas, started up alongside a new cracker, also in Freeport.
Front-month ethylene spot trades ranged 29.500-32.250 cents/lb in September, compared to 20.125-26.250 cents/lb in August.
Prior to the disruptions from Harvey, ethylene spot prices had been trending higher as the market anticipated the start-ups of PE projects. August front-month spot prices had been higher than 17.000-21.000 cents/lb in July.
US ethylene contract prices typically settle at the start of the month for the prior month.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical and Westlake Chemical.