US April ethylene contracts settle at 18-year low on ample supply, soft demand
HOUSTON (ICIS)–US April ethylene contracts settled for the majority of participants at a decrease of 1.25 cents/lb ($28/tonne), as lower spot prices outweighed higher cash costs amid muted demand.
The settlement puts April contracts at 20.50 cents/lb, down from 21.75 cents/lb in March.
Contacts are at their lowest since settling at 19.75 cents/lb in February 2002.
Average spot prices fell by about 4 cents/lb month on month, remaining near record lows for most of April, as ample supply outpaced coronavirus-weakened demand.
Front-month ethylene traded in April at 8.000-9.000 cents/lb, down from 10.000-14.375 cents/lb in March.
Long supply has been persistent as a flurry of cracker start-ups and capacity expansions has not yet been matched by downstream demand.
The demand shortfall is attributable to several factors, including delayed derivative plant start-ups, reduced global economic activity and less export demand.
Average cracker cash costs were about 1.5 cents/lb higher as drilling cuts reduced natural gas liquids (NGL) production, pressuring ethane prices.
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 Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.
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