US ethylene spot prices rise on growing fears of floods affecting cracker operations at Mississippi

16-May-11
Ethylene spot prices in the US rose by 5% in the last three days on growing fears that flooding will affect operations at crackers near the Mississippi river, as per ICIS. The Mississippi river is expected to peak this week to record high levels. Concerns abound that the expected flooding next week could disrupt production at a number of crackers near the Mississippi river in Louisiana, including a 610,000 tpa Dow Chemical unit in St Charles; a 612,000 tpa Williams cracker in Geismar; and two Shell crackers in Norco, which have a combined capacity of 1.4 mln tpa. The flooding could force the crackers to cut rates, if not shut down altogether. The four crackers account for around 10% of total US ethylene capacity. Ethylene for May traded at 70.50 cents/lb (US$1,554/ton) on Friday, up from deals done at 67 cents/lb early in the week. Additionally, the Mississippi is flowing at incredible speeds downstream, and barges cannot get up the river for loading. Slow barge traffic on the Mississippi could pose problems for crackers in the region. One concern is that the crackers may not be able to move out co-product volumes. If product tanks begin to fill up, the crackers will have no option but to shut down. A reduction in barge traffic could also impact feedstock deliveries to the crackers
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