US ethylene contracts for September rise 5% on higher spot prices

HOUSTON (ICIS)–US ethylene contracts for September settled up by nearly 5% on Tuesday, lifted by increased spot prices last month.

The settlement puts the September contract at 48.25 cents/lb ($1,064/tonne, €830/tonne), up by 2.25 cents/lb from August.

US ethylene contracts normally settle at the beginning of the month for the previous calendar month.

The increase in September was expected because of higher ethylene spot prices in recent weeks.

Ethylene prices averaged 59.13 cents/lb in September, rising by just over 10% from August, mostly on support from supply disruptions during the month.

At least three US crackers experienced unplanned outages in September, while other units began the month running at reduced rates in the aftermath of Hurricane Isaac.

Two US crackers were also taken off line for planned maintenance last month, providing additional support for the monomer.

The increase in spot prices in September outweighed a reduction in ethylene production costs, which fell last month on the back of lower ethane prices.

Ethane accounts for around 60% of the feedstocks used to make ethylene in the US.

Mont Belvieu ethane prices averaged 31.953 cents/lb in September, down from 35.403 cents/gal in August.

The drop in production costs combined with higher spot prices widened US ethylene margins, which in September averaged 49.12 cents/lb, using ethane as a feedstock, up from 41.81 cents/lb in August.

The increase puts year-to-date US ethylene margins in 2012 at 43.52 cents/lb, up by nearly 60% from 27.47 cents/lb in 2011.

($1 = €0.78)

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