HOUSTON (ICIS)--US ethylene contracts for April settled at an increase of 2 cents/lb, market sources said on Wednesday.
The settlement puts April contracts at 32 cents/lb ($705/tonne), up from 30 cents/lb in March.
The increase is largely due to about a 1 cent/lb increase in average spot prices and 3 cent/lb increase cash costs for April over March, market sources said.
Front-month ethylene traded in April at 27.500-30.000 cents/lb, up from 25.250-29.625 cents/lb in March.
Production issues contributed to the higher spot prices as outages continued into early April for two US Gulf crackers, which had unplanned outages since mid-March, and for a Midwest cracker, which began a turnaround in mid-March.
A turnaround for another US Gulf cracker began during the second half of April.
However, supply is expected to improve over the next few months as new crackers and expanded crackers come online and ramp up.
Operating rates for LyondellBasell's expanded cracker in Corpus Christi, Texas, exceeded 90% in April, and the cracker is expected to reach its nameplate capacity by the end of the second quarter. The expansion project increased the plant's output by 363,000 tonnes/year, bringing total capacity to about 1.1m tonnes/year.
A new cracker near Corpus Christi, Texas, which is a joint venture of Mexichem and Occidental Chemical (OxyChem), continues to ramp up, with the plant expected to reach 70% of its planned 544,000 tonne/year capacity in 2017.
Dow Chemical is about half-way through commissioning its new cracker in Freeport, Texas, which is planned to have a 1.5m tonne/year capacity.
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.