US February ethylene settles 2.75 cents/lb lower

HOUSTON (ICIS)–US February ethylene contracts have settled for a majority of participants at a decline of 2.75 cents/lb from the prior month amid lower spot prices and lower production costs, market sources said on late on Thursday and on Friday.

Photo by Mode/REX/Shutterstock

The settlement puts February contract prices at 30.00 cents/lb ($661/tonne), down from 32.75 cents/lb in January.

The lower settlement is in line with falling spot prices, which have been under pressure from lengthening supply. Ethylene production has been good, while consumption has been hampered by several downstream production issues.

Force majeure declarations remain in place at two US Gulf polyethylene (PE) plants, while several new PE plants have struggled to achieve full operating rates. An estimated 3m tonnes of PE capacity is offline or disrupted.

Meanwhile, ethylene production has been relatively strong since the final hurricane-related outages were resolved in December and with the addition of a new 1.5m tonne/year cracker at Dow Chemical’s complex in Freeport, Texas.

Ethylene spot prices, which had been range-bound in the high 20s cents/lb through the last several months of 2017, began falling in late January and continued falling throughout February. Front-month spot ethylene traded in February at 21.750-25.375 cents/lb, compared with 26.500-29.000 cents/lb in January.

Average spot prices in February were nearly 5 cents/lb lower than in January, market sources said.

Lower production costs also contributed to the decline for February contract prices.

In February, ethane costs fell into the low 20s cents/gal from the high 20s cents/gal in January.

Average production cash costs in February were down by about 1 cent/lb, market sources said.

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.