US August, September ethylene contracts settle at increases

HOUSTON (ICIS)–US August and September ethylene contracts have settled for a majority of participants at increases of 1.75 cents/lb and 3.00 cents/lb, respectively, amid rising spot prices and low inventory levels.

The double-month settlement puts August ethylene contracts at 26 cents/lb ($573/tonne) and September at 29 cents/lb. At least one participant did not settle August and September contracts at those levels.

July ethylene contracts settled at 24.25 cents/lb.

Spot prices rose amid logistics and supply constraints. A spate of cracker issues in the past few months, including prolonged turnarounds, unplanned outages and delayed start-ups, has lowered ethylene inventory levels.

ExxonMobil’s olefins site continues to run at reduced rates after the late July fire.

Front-month ethylene on the Nova system traded at 19.25-27.00 cents/lb in September, compared with 16.75-19.50 cents/lb in August and 12.50-16.00 cents/lb in July.

Production costs averaged 11-12 cents/lb in September. Costs rose by 0.5 cent/lb in August from July but remained in the 8-9 cent/lb range.

US ethylene contract prices typically settle at the start of the month for the prior month, but August contracts did not settle in early September.

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.