US ethylene spot margins peak to new highs as spot prices spike and ethane falls

09-Apr-10
US ethylene spot margins have risen to new highs this week on another hike in spot prices and a drop in feedstock ethane values. As per ICIS, spot ethylene for April was heard traded at 74 cents/lb (US$1631/ton), rising from last weeks’ deals done range of 70-73 cents/lb. Also, ethane, the main US feedstock for ethylene, dipped by 13% this week amid looser supply mostly due to increased demand for heavier feeds like propane by cracker operators. Ethane traded at 51.375 cents/gal, down from last weeks’ 59 cents/gal. This drop coupled with strength in the monomer have propelled spot ethylene margins to 53.3 cents/lb, a 13.6% jump from last week, following last weeks’ 23% margin surge of over 10 cents/lb. Ethylene margins for naphtha-based producers closely follow ethane, as robust co-product spot prices have offset the latest uptrend in naphtha values. Naphtha margins were estimated at 53.6 cents/lb on Thursday, up by 4.3% from 51.4 cents/lb last week. Margins have never been this high except maybe very briefly after a hurricane. Strength in US ethylene prices can be attributed to lingering impact from outages earlier this year followed by new maintenance this month. Dow Chemical’s 499,000 tpa Plaquemine 2 cracker in Louisiana for a 50-day turnaround, while a maintenance shutdown is reported at one of INEOS’s US crackers in Chocolate Bayou, with a 1.8 mln tpa combined ethylene capacity. The outlook for ethylene points to continued strength, at least for the short term.
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