US spot ethylene rises after five-week drop

HOUSTON (ICIS)–Spot prices for US ethylene rebounded after a five-week downtrend as news emerged of a cracker outage in Louisiana.

ICIS assessed spot prices on Friday at 26.00-28.75 cents/lb ($573-634/tonne), up from 25.25-28.25 cents/lb in the previous week.

Williams Olefin’s unit in Geismar is offline because of a power interruption, and repairs could take three weeks, according to market sources.

The unexpected shutdown has given the spot market a boost, even as Chevron Chemical Phillips (CP Chem) continues restart activities on its Sweeny 33 cracker following a turnaround.

Last week, front-month ethylene prices fell to a low of 25.25 cents/lb, putting spot values 34% below levels from early February.

Supply was lengthening as Formosa Plastics had resumed operations at its Point Comfort 2 cracker after a turnaround and another unit had begun restart activities after planned maintenance.

There were no major unexpected production issues, as well as ample availability after the recent start-up of a new joint venture cracker in Ingleside, Texas.

However, the sudden shutdown prompted March ethylene to climb by about 10% from Wednesday to Thursday.

Still, the current uptrend is unlikely to reverse the anticipated decrease in March contracts.

The month-on-month drop in overall spot prices, as well as decline in cracker cash costs, are leading to expectations that March contracts will settled at a decrease of several cents/lb.

US March ethylene contracts are expected to settle in the first couple of days of April.

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

Major US buyers include Occidental Chemical, Total and Westlake Chemical.

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