HOUSTON (ICIS)--US ethylene contracts for March have settled at a decrease of 5.75 cents/lb, market participants confirmed on Tuesday.
The settlement puts March contracts prices at 30 cents/lb ($661/tonne), their lowest level since May 2016.
Early agreements were heard on Monday, with further confirmation heard on Tuesday. The drop is in-line with market expectations and reverses three consecutive months of strengthening contract prices amid tight supply.
The settlement follows lower spot prices, lower cash costs and expectations of improving supply.
Front-month ethylene traded in March at 25.250-29.625 cents/lb, down from 28.500-38.000 cents/lb in February.
Meanwhile, sources said that cash costs dropped by nearly 5 cents/lb month-on-month amid lower feedstock costs and higher co-product credits.
Market sources expect supply to lengthen in the coming weeks as production issues are resolved at two US Gulf crackers and a Kentucky cracker is restarted after an expansion project.
US ethylene contracts typically settle in the first days of the month for pricing in the previous month.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical, Total and Westlake Chemical.