US August ethylene contracts delayed amid higher production costs

Author: Antoinette Smith

2019/09/06

HOUSTON (ICIS)--US August ethylene contracts have not fully settled and will likely be part of a two-month settlement in early October, amid mixed views about production costs.

Cracker cash costs rose by about 0.5 cent/lb for August. Ethane prices have risen on strong demand and higher ethylene prices. The following chart shows recent price movement for feedstock ethane.

ICIS Editorial Chart goes here

Average ethylene spot prices rose, with front-month ethylene on the Nova system trading at 16.75-19.50 cents/lb in August, compared with 12.50-16.00 cents/lb in July.

ExxonMobil continues to run its olefins plants at reduced rates in Baytown, Texas. Louisiana is facing supply limitations as well, and Eastman began its 60-day turnaround ahead of schedule.

US ethylene contract prices typically settle at the start of the month for the prior month, generally reflecting the overall change in spot prices and cash costs.

July ethylene contracts had settled at 24.25 cents/lb ($535/tonne), up by 0.75 cent/lb from June, as higher spot prices outweighed near-record-low production costs.

The last delayed ethylene contract settlement was in April 2018, amid long supply and increased costs.

Ethylene is a key petrochemical feedstock, used to make polyethylene (PE), ethylene glycol (EG) and polyvinyl chloride (PVC) among other products.

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

Major US buyers include Occidental Chemical and Westlake Chemical.