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

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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