US ethylene hits 29-month high

Chemicals , ethylene , Europe , USA Sep 19, 2014 No Comments

US spot ethyleneEthylene prices continue to be high in the spot ethylene market because of three ongoing cracker shutdowns and one scheduled shutdown at the end of October. At the beginning of this week, front-month Williams System ethylene traded at 74 cents/lb ($1,631/tonne) and then 75 cents/lb, up from a trade at 73 cents/lb the previous day.

US spot ethylene prices hit a 29-month high on Tuesday on the back of two trades, tracking continued tight supply and low inventory levels.

The climb in prices started early last week, after talk of ExxonMobil starting a five to six-week turnaround at its Baytown Olefins Plant in Baytown, Texas. A company source with knowledge of operations said the planned maintenance was underway but was unable to provide its exact duration. “Planned maintenance is expected to continue for the next several weeks and we expect to meet our contractual commitments,” the source said. ExxonMobil’s Baytown Olefins Plant has ethylene capacity of 960,000 mt/year.

Supply tightened in July after a fire forced a shutdown at Chevron Phillips Chemical’s Port Arthur, Texas, facility.

The current spot levels are pushing some producers to delay turnarounds until next year. Formosa Plastics postponed its scheduled turnaround in Point Comfort, Texas, until late October, company sources said, while Dow Chemical and Chevron Phillips are postponing scheduled turnarounds until 2015 at their respective plants in St. Charles, Louisiana, and Cedar Bayou, Texas.

Meanwhile, in Europe, the gap between spot ethylene and propylene prices started to widen again as of the beginning of September and the premium on propylene over ethylene reached €150/ton this week, as per ChemOrbis.

At the end of April 2014, the gap between spot ethylene and propylene hit a record high, exceeding €280/ton as both monomers followed different paths starting from March. Spot propylene tracked a firming trend back then after a cracker shutdown intensified the tightness in availability whereas long supply exerted downward pressure on the ethylene market.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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