HOUSTON (ICIS)--US ethylene contracts for July have settled for most participants at a decrease of 1.25 cents/lb from June, but the agreement was not market-wide, market sources said on Wednesday.
July contract prices are at 29.25 cents/lb ($645/tonne), down 4.1% from 30.50 cents/lb in June, which also was not market-wide.
The decrease was due to a decline in average spot prices of about 4 cents/lb, which was offset by about a 2 cent/lb increase in average cash costs.
Ethylene prices have been under pressure as supply and inventories have been long, mostly because of recent cracker expansion projects coming online in late 2016 and early 2017.
Several cracker projects have come online, including expansion projects in Texas and Louisiana and a new cracker in Texas that reached full operating rates in June. Further strengthening ethylene supply, there have been few production issues in recent months.
Meanwhile, several polyethylene (PE) projects that had been expected to start up in the mid-2017 have yet to come online. The start-up of part of Dow Chemical's polyethylene project at its site in Freeport, Texas, is imminent, executives said last week. PE projects for Chevron Phillips Chemical in Sweeny, Texas and for ExxonMobil Chemical in Mont Belvieu, Texas, are expected to start up later in the third quarter.
Spot prices in July fell to a 17-month low during July and margins remained narrow throughout much of the month largely due to the lower spot prices. Front-month ethylene spot prices ranged 17-21 cents/lb in July, compared to 23-28 cents/lb in June.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical and Westlake Chemical.