HOUSTON (ICIS)--US ethylene spot prices ticked higher as limited production and good demand kept values supported despite a mid-week dip in costs for upstream ethane.
US spot ethylene was assessed on Friday at 20.000-20.250 cents/lb ($441-446/tonne), compared with 19.500-19.625 cents/lb in the previous week.
The US ethylene market had been lengthy through much of 2018 amid new capacity which has come on line this year and in 2017.
New downstream polyethylene (PE) capacity also came on line in 2017, much of which took several months to ramp up and allowed ethylene supplies to build. PE production rates have been trending higher through the year, which has increased ethylene consumption.
Meanwhile, production has been limited amid several cracker outages and thin cracker margins which have encouraged slower operating rates. A cracker which was on turnaround in much of September and October is restarting, but another is scheduled for a turnaround beginning in late November.
Amid the higher consumption and some limits to production, ethylene inventories in the third quarter fell for the first time in more than a year.
The ethylene market has become more balanced, with front-month ethylene trading in a very narrow range during the week.
Additional capacity is scheduled to start up in late 2018 and early 2019 which could return some length to the market.
However, recent declines in costs for naphtha, propane and butane could encourage some flexible crackers to increase heavier feedstock usage and could continue to keep ethylene production somewhat limited. Heavier feedstocks produce less ethylene and more co-products.
Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.