Ethylene margins rise in North America

02-Nov-06

Several planned and unplanned plant shutdowns, including those at Nova Chemicals and Westlake Chemicals, have restricted ethylene supply and maintained contract prices in Sep 2006 in North America. Reduced energy costs as well as sliding feedstock costs have led to certain price stability, pushing ethylene margins in Sep 2006 to levels close to the post-hurricane peaks enjoyed in 2005. However, greater supply and weaker demand are expected to bring down margins in Q4 2006. Nova Chemical has resumed operations at its cracker in Joffre, Canada, after a three-week maintenance. Westlake Chemical's 1.2 bn lb/y cracker at Lake Charles, USA, is also poised to resume production. Though these two majors are to resume operations, ethylene supply in Oct 2006 may still be tight due to turnarounds that will eliminate over 10% of North American supply. Contract prices may drop in Oct 2006 due to declining demand and feedstock prices.