April ethylene contracts in USA set for decline in line with lower spot values

03-May-13

US April ethylene contracts appeared set for a decline, tracking weaker spot prices during the month, as per ICIS. Early projections peg April contracts falling by 1.0-1.5 cents/lb (US$22-33/ton), based on a roughly 7% fall in the average April spot ethylene price. The expected decline in April ethylene contracts is slightly mitigated by higher production costs as well as some improvement in demand from the polyvinyl chloride (PVC) market. March US ethylene contracts settled at 48 cents/lb, the third month in a row at that price. April spot ethylene was mostly weaker during the month because of long supply and soft demand from the polyethylene (PE) market, sources said. Demand is not estimated to start picking up until June or July, after which prices are expected to rise. Interestingly, despite the softer prices and weaker margins on ethylene, business is still strong. “People are still making money on olefins,” the source said in ICIS. “It’s a very profitable time.”