Lack of new downstream plants lead to US ethylene disconnect – DowDuPont

02 August 2018 16:23 Source:ICIS News

HOUSTON (ICIS)--Ethylene markets in the US Gulf Coast have become disconnected because there is not enough derivative demand or supply to convert it, an executive with DowDuPont said on Thursday.

This should balance out as the year progresses, said Jim Fitterling, chief operating officer of DowDuPont's Materials Science segment. He is also CEO-elect of Dow Chemical, the DowDuPont Materials Science company that will be spun off.

Fitterling made his comments during an earnings conference call.

"Ethylene is a little bit disconnected right now, just in the US Gulf Coast because there is not enough derivative demand or supply there to convert it," Fitterling said. "I think as the year progresses, you're going to see some of that balance out in the short term.

"You've seen some people turn down higher-cost ethylene derivatives because there is not much capacity to move it out."

Fitterling did not specify what this disconnect, and he did not elaborate on its nature.

However, the spread between ethane and ethylene has tightened over the year, as shown in the chart below.

Meanwhile, the gap has widened between prices for US ethylene and various grades of polyethylene (PE), as shown below.

Pictured above: Polyethylene (PE), which is a derivative of ethylene, is used to make bags. (Photo credit: Dinendra Haria/REX/Shutterstock)

By Al Greenwood