HOUSTON (ICIS)--US March ethylene contracts have settled for a majority of participants at a decline of 1.75 cents/lb from the prior month amid lower month-on-month spot prices, sources said on Tuesday.
The settlement puts March contract prices at 28.25 cents/lb ($623/tonne), down from 30.00 cents/lb in February.
The settlement tracks recent declines in spot prices, which hit a nine-year low during March. Front-month spot ethylene traded at 16.000-22.000 cents/lb in March, compared with 21.750-25.375 in February.
Average ethylene spot prices fell by 3.3 cents/lb in March from February, market sources said.
The downward pressure has been due to supply overtaking demand amid good production and downstream production issues.
There have been few production issues for ethylene units in March, following the restart of a Texas cracker after a months-long outage in February. Further bolstering production, a new 1.5m tonne/year cracker started up in early March at the Chevron Phillips Chemical (CP Chem) Cedar Bayou complex in Baytown, Texas.
Meanwhile, demand had been hampered as several new downstream polyethylene (PE) units have struggled to reach full operating rates.
Downstream PE operating rates were improving by late March and are expected to continue improving.
The increased consumption helped ethylene spot prices climb slightly above the historic lows of mid-March. US spot ethylene was assessed at 16.75-17.25 cents/lb for the week ended 30 March.
However, the ramp up of the new CP Chem cracker, and the start-up of two additional cracker projects is expected to keep supply from becoming snug in the coming months.
An ExxonMobil 1.5m tonne/year cracker and an Indorama 440,000 tonne/year cracker are expected to start up in the second quarter.
US ethylene contract prices typically settle at the start of the month for the prior month.
Major US ethylene producers include ExxonMobil, INEOS, LyondellBasell and Shell Chemical.
Major US buyers include Occidental Chemical and Westlake Chemical.