HOUSTON (ICIS)--US ethylene spot prices ticked higher amid good demand and the commissioning of a downstream unit.
US spot ethylene was assessed on Friday at 20.25 cents/lb ($446/tonne), compared with 20 cents/lb in the prior week.
Ethylene consumption into polyethylene (PE) production has improved following the slow ramp-up of new units in late 2017. PE production has been significantly stronger than the prior year since mid 2018.
Commissioning activities have begun for a portion of the PE capacity at Sasol's Lake Charles Chemicals Project (LCCP), and production is expected before the end of December. Mechanical completion of a cracker that is also part of the LCCP project is imminent.
A curtailment to production may also be supporting ethylene spot prices amid a cracker turnaround and improved economics for heavier feedstocks.
Spot ethylene cracker margins for naphtha feedstocks have been stronger than those for ethane feedstocks for the past several weeks amid declines in upstream crude oil. Naphtha produces much less ethylene when cracked compared with ethane.
However, ethane remains the most common US cracker feedstock and many new crackers that have been or are being built as part of a wave of new capacity are designed for ethane-only feedstocks.
The increased demand on ethane has kept the feedstock supported despite recent declines in the overall energy complex. While US ethane supplies are not considered tight, the logistical systems needed to get the feedstock to crackers in the US Gulf are limited.
Ethane feedstock costs are expected to remain volatile into 2019 as pipeline and fractionation infrastructure is expanded to meet demand from upcoming new crackers.
That new capacity also is likely to return some length to the ethylene market in early 2019. Several crackers are expected to start up in the coming months, including the Sasol LCCP cracker and an Indorama cracker which is undergoing start-up activities.
Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.