HOUSTON (ICIS)--Initial US ethylene contracts for July have settled at a decrease of 1.25 cents/lb from June, market sources said on Wednesday, although the agreement is not market-wide.
The decrease puts July contract prices at 29.25 cents/lb ($645/tonne), down 4.1% from 30.50 cents/lb in June.
However, the settlement is not expected to be market-wide, with at least one participant that has not agreed to the July price. The June contract settlement also was not market-wide.
The decline for initial July contracts was due to lower spot prices, but was offset by higher cash costs.
Front-month trades in July ranged 17.0-21.0 cents/lb, compared to 23.0-28.0 cents/lb in June.
Average spot prices were down by about 4 cents/lb, market sources said.
Strong production and recent ethylene capacity expansions have kept downward pressure on spot prices in recent weeks.
However, average cash costs rose by about 2 cents/lb month on month, which limited the downward pressure from lower spot prices market sources said.
A full settlement is pending further confirmation from market participants.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical and Westlake Chemical.