16-Aug-16 US ethylene prices are expected to face significant downward pressure in Q4 after a series of planned and unplanned outages supported prices through the summer, as per Argus Media. H1-2015 saw a heavy turnaround season that took offline, about 10% US ethylene production during most of Q2. In August, spot ethylene prices were supported by unplanned outages at ExxonMobil's Baton Rouge, Louisiana, cracker and the BASF/Total cracker in Port Arthur, Texas. Front-month ethylene in the Williams cavern hit 32.75¢/lb on 9 August, the highest level in nearly a year. August ethylene continues to trade at 32¢/lb. Much of the planned maintenance and expansion work concluded in the first half of the year. However more is coming in Q3. Maintenance and expansion work at LyondellBasell's Corpus Christi, Texas, plant, which will add 800mn lb/yr (400,000 tpa) of ethylene capacity, should be complete in September. Planned maintenance is also scheduled at crackers in Cedar Bayou, Texas, and Plaquemine, Louisiana, in September.
Once this work is done, the added capacity stands to significantly lower US ethylene prices, as there are no additional derivative units or export capacity to consume it. A new polyethylene unit planned as part of a joint venture between Sasol and Ineos will likely be completed late in 2016, and the next significant wave of new polyethylene capacity won't start up until the second half of 2017, at the same time new crackers are commissioned. Traders worked to secure volumes ahead of the scheduled turnarounds and expansions, which should limit volatility in the spot market without unexpected upsets. September and October material has been selling at a 0.375¢/lb premium over December ethylene. While new fourth quarter production will lengthen the ethylene market, feedstock costs for both ethane and propane are poised to increase, potentially squeezing margins, due to export demand and the heating season.
Source Courtesy: Argus Media
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