HOUSTON (ICIS)--US ethylene spot prices slumped this week on the back of long supply and soft sentiment, causing a unit to be shut down due to poor margins.
US spot ethylene was assessed for the week ended on Friday at 12.000-12.500 ($265-276/tonne) cents/lb, compared with 13.125-14.250 cents/lb in the previous week.
Market sources said the recent fall in prices led Chevron Phillips Chemical (CP Chem) to idle an ethylene unit (No 22) at its complex in Sweeny, Texas this week as cracker economics have become unfavourable. Company sources did not immediately respond for comment.
US spot ethylene prices have been at historic lows as ethylene production, bolstered by new capacity, has overtaken ethylene consumption, which has been hampered by a slower-than-expected ramp up for new polyethylene (PE) units.
Outages at existing PE plants, including a force majeure at an INEOS plant, have further hampered ethylene consumption rates.
Since late 2017, about 3m tonnes/year of new ethylene capacity and about 3.5m tonnes/year of new PE capacity has started up. The new crackers have been running well, but several of the new PE plants have struggled to reach full operating rates.
The new ethylene capacity has also increased demand for ethane, which has driven up feedstock costs for ethylene production and squeezed cracker margins. Although there was some expansion for the week ended 4 May, spot ethylene margins remain tight for ethane feedstocks and negative for most other feedstocks.
Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.